Throws out disgruntled/dishonest ex-statutory auditor cum shareholder's plea against co. merger
HC dismisses appeal filed by shareholder, also former statutory auditor (holding 8 shares) of respondent co. against Company Judge order approving scheme of merger of the respondent co.; Notes the fact that as per Sec 226(3)(e) of Cos Act, 2013 (w.e.f. December 13, 2000), a shareholder was rendered disqualified from being appointed or continuing as statutory auditor of the same company, thus, appellant was removed as statutory auditor of the co.; Holds that "The appellant holding merely eight shares is litigating as he is clearly peeved at his removal as statutory auditor and that the petition as well as appeal against the merger has been filed maliciously and malafide."; Also observes that appellant dishonestly tried to perpetuate his appointment by setting up a false claim of transfer of his shareholding to his son, holds that, "A Chartered Accountant by profession, such actions on the part of the appellant are in utmost bad faith.."; States that, "Valuable judicial time has been caused to be squandered on this meritless litigation at the instance of the appellant who must also compensate the system" and directs appellant to pay Rs 75,000 :Delhi HC
The ruling was delivered by Justice Gita Mittal and Justice I.S.Mehta.
Dr. Manmohan Sharma and Mr. Anurag Pratap argued on behalf of the appellant, while respondent was represented by Advocates Alok Agarwal, Sanjeev Singh and Pramanshi.
Russian regulator accuses Google of abusing market dominance; SFIO probes United Spirits' accounts
Russian regulator accuses Google of abusing market dominance; SFIO probes United Spirits' accounts
DIPP : Facility sharing arrangements between group cos. not 'real estate business' within FDI policy
JUDE MEDICAL INDIA PRIVATE LIMITED vs. DEPUTY COMMISSIONER OF INCOME TAX
HYDERABAD TRIBUNAL
Transfer Pricing—Reference to transfer pricing officer—Assessee company which was engaged in the business of trading of medical devices had filed its return of income declaring a loss of Rs.6,80,33,234—During the assessment proceedings u/s 143(3) , the AO observed that the assessee had entered into international transactions with its AE for purchase of Cardio Vascular Devices for sale of the same in India to non-related parties mainly through distributors and also through direct sales to hospitals—AO referred the matter to the TPO for determination of the ALP u/s 92CA—TPO proceeded to determine the ALP by adopting the TNNM as the most appropriate method and suggested the shortfall of Rs.11,55,73,046 as an adjustment u/s 92CA—AO passed a draft assessment order against which assessee preferred objections before the DRP raising an objection that the RPM was the most appropriate method in the circumstances of the case of the assessee—DRP, however, upheld the findings of the TPO incorporated in the draft assessment order—AO passed final assessment order against assessee—Held, assessee was purchasing medical devices from its AEs even in the earlier A.Ys too—From the order of this Tribunal is was evident that the assessee had entered into international transactions for purchase of medical equipments and there was no dispute with regard to the method adopted by the assessee during its TP study—There was no reason as to why the assessee should not be allowed to adopt the same method even during the relevant A.Y—it was found that the TPO has not brought on record any evidence as to how the products sold by the comparable companies are not similar to the products sold by the assessee herein—When the TPO desires to reject the method consistently being followed by the assessee and desires to adopt a different method, the TPO was required to give his reasoning which was absent in the present case before us—Issue was remand the issue to the file of the TPO for determination of the most appropriate method for determination of the ALP—Assesses appeal was allowed.
IT : Where even though assessee had taken a loan in cash, since loan
IT : Where even though assessee had taken a loan in cash, since loan was routed through bank account of assessee for payment to Government for converting land into free hold property, no penalty could be imposed under section 271D
[2015] 61 taxmann.com 219 (Allahabad)
HIGH COURT OF ALLAHABAD
Commissioner of Income-tax -II, Agra
v.
Smt. Dimpal Yadav
[2015] 61 taxmann.com 219 (Allahabad)
HIGH COURT OF ALLAHABAD
Commissioner of Income-tax -II, Agra
v.
Smt. Dimpal Yadav
CL : Court cannot sanction a compromise or arrangement which involves declaration of dividend in violation of section 123 of the Companies Act, 2013. Where a company gifts to its shareholders shares held by it in another company, it is in substance distributing a "dividend" ; within the meaning of section 2(35) of the Companies Act, 2013 as also section 2(22A) of the Income-tax Act, 1961 since company could have sold those shares and distributed the proceeds. Allowing distribution of these shares by allowing reduction of securities premium account would violate section 123 of the Companies Act, 2013
• Section 123 of the Companies Act,2013 does not lay down any procedure for payment of dividend but lays down conditions for the same. Therefore, Court cannot while sanctioning a compromise or arrangement u/s 391 to 394 of the Companies Act,1956 waive compliance with section 123 of the Companies Act,2013.
• Further, gift of any assets by a company to any person during the income-tax proceedings shall be violative of section 281 of the Income-Tax Act,1961 and section 281 carves out no exception on the basis of sufficiency of assets or otherwise. Court also cannot sanction a compromise or arrangement which violates section 281 of the 1961 Act
HIGH COURT OF BOMBAY
Indian Seamless Enterprises Ltd., In re
• Section 123 of the Companies Act,2013 does not lay down any procedure for payment of dividend but lays down conditions for the same. Therefore, Court cannot while sanctioning a compromise or arrangement u/s 391 to 394 of the Companies Act,1956 waive compliance with section 123 of the Companies Act,2013.
• Further, gift of any assets by a company to any person during the income-tax proceedings shall be violative of section 281 of the Income-Tax Act,1961 and section 281 carves out no exception on the basis of sufficiency of assets or otherwise. Court also cannot sanction a compromise or arrangement which violates section 281 of the 1961 Act
HIGH COURT OF BOMBAY
Indian Seamless Enterprises Ltd., In re
ST - A debit entry will have a corresponding credit entry and existence of such entry w.r.t royalty on vehicles manufactured by appellant during particular month, without an entry in supplier' s ledger, suffices for it to be included in value of taxable service and liable to be taxed by fifth of following month: CESTAT
MUMBAI: THE appellant, a subsidiary of M.s General Motors Corporation USA, is a manufacturer of vehicles and, for the production of Spark and Beat, has contracted to receive technical know-how under agreement with M/s General Motors Daewoo Automotive Technologies and M/s General Motors Global Technology Operations, both also being subsidiaries of M/s General Motors Corporation. These are, therefore, associated enterprises of the appellant who provide "intellectual property service" . As the service-providers are based outside India, it devolves on the appellant to discharge tax liability under "reverse charge mechanism" in accordance with section 66A of Finance Act, 1994.
Vide an o-in-o dated 05.11.2012, the CCE, Pune-I has confirmed tax demands of Rs.3,26,83,401 and Rs.6,87,98,709 respectively for the period from April 2009 to June 2010 and from July 2010 to December 2011 and imposed penalty/interest.
It is the case of the department that there was a short-levy at the end of each month since Explanation to Rule 6 of STR, 1994 required the inclusion of debit/credit of any amount relating to royalty in any account, whether called "suspense" ; or otherwise, in taxable consideration where the transaction is between two associated enterprises for determining tax liability.
The explanation inserted after the third proviso in rule 6(1) by Notification 19/2008-ST dated 10.05.2008 read -
Explanation .- For the removal of doubts, it is hereby declared that where the transaction of taxable service is with any associated enterprise, any payment received towards the value of taxable service, in such case shall include any amount credited or debited, as the case may be, to any account, whether called 'Suspense account' or by any other name, in the books of account of a person liable to pay service tax.
The appellant submitted that the original authority has chosen to disregard the fundamental fact that the entries in their books are provisional and solely for the purpose of furnishing Management Information System (MIS) reports to the holding company which are reversed at the time of the final entry at the end of each quarter once the net selling price as well as other details relevant to calculation of dues to the suppliers of know-how are made available. It is further contended that the manner and schedule of payment of dues to suppliers of know-how are embodied in the agreements with the said suppliers. Moreover, the appellant is aggrieved that the original authority has not accorded exemption to the extent of R&D cess available to them. In sum, the claim of the appellant is that the tax has been demanded without considering the actual amount paid to service provider, the contracted frequency of payment and the eligibility for exemption.
Furthermore, it is submitted that the intent in the deeming provision of Rule 6 is limited to debiting the account of the supplier in the books of the recipient for services rendered by associated enterprises and that such addition is mandated only in conjunction with actual payment if such accounting entries have been made.
The AR justified the demand by reiterating the findings of the original authority.
The Member (T) writing for the Bench inter alia observed -
+ The certainty and clarity required of taxing statutes cannot leave such a critical aspect as taxable event to the whims of a contract between two entities or to be conditional upon a perfection sought for in such contracted agreement. The delivery of the service at its destination becomes the taxable event subject, by the law as it then stood, to payment for the service. With the insertion of the Explanation in Rule 6 of Service Tax Rules, 1994, effective from 10 th May 2008 such payment was imbued with a more comprehensive meaning insofar as transaction between associated enterprises is concerned. The value was not restricted to payment per se but was liable to supplemented by accounting entries relating to the service transacted between associated concerns.
+ Contention that royalty is payable every quarter and, that till the introduction of Point of Taxation Rules in 2011, valuation was on "receipt basis" and not on "accrual basis" thereby allowing for tax liability only when consideration is actually payable would have been acceptable had not the Explanation been inserted in Rule 6 owing to which the acknowledgement in the books was sufficient to deem the payment for service to have been effected .
+ Argument (that Explanation is not extendable to such deemed payment because it needs to be read in the context of the phrase "any payment to be received" and since the payment is to be received at quarterly intervals by the service provider, such deemed payment cannot be added for the months where actual payments have not been made ) will not suffice in view of the circumstances that led to insertion of the said Explanation as pointed out in circular of Central Board of Excise & Customs (334/1/2008- TRU dated 29 th February 2008).
+ Between associated enterprises, the certainty of receipts is not tested against the enhancement of cash or bank balance; mere book entries have the effect that it may not have between two independent entities. Such book adjustments often serve to delay or defer tax payment without loss of stakeholder value and this deeming provision aims to disincentivize such tendencies.
+ The deeming effect of the Explanation has to be applied wherever accounting entries relating to the service transaction finds a place in the books of the person liable to pay the tax.
+ A debit entry will have a corresponding credit entry and the existence of such entry with respect to royalty on vehicles manufactured by the appellant during a particular month, without an entry in the supplier' s ledger, suffices for it to be included in the value of taxable service and liable to be taxed by the fifth of the following month.
+ Tax liability has been discharged by the appellant, albeit in a schedule of their own choosing, relying on the principle of "receipt" of consideration by the service provider. As this happens to be at variance with the provisions of Rule 6 of Service Tax Rule, 1994 and Rule 7 of Point of Taxation Rules, 2011, the tax liability needs to be computed for each month on the amount booked in the "royalty accrued" account with the reversal being taken into account whenever that has occurred.
+ Needless to state, in such month, it would be tantamount to taxes paid in advance and liable to be adjusted against taxes due in the month(s) thereafter. Owing to absence of any definite computation in the impugned order and the claim of reversal, as well as that of tax payment, not having been doubted in the impugned order, it would appear that tax liability has indeed been discharged in full though belatedly in some months.
+ As the taxes have been discharged during the period under dispute, the appellant' s liability is limited to interest for the first two months of each quarter to the extent of amount not paid or short-paid. This should have been effected in the impugned order but, not having been done, needs to be remedied.
Conclusion:
We sustain the finding in the impugned order that tax liability of the appellant arises each month for the amount booked, even provisionally, as royalty in their accounts, but with the deductions of amounts paid as R&D cess, (as recorded by us in paragraph no. 14), if any. We set aside the demand for tax in view of findings supra regarding discharge of tax liability and direct the jurisdictional Commissioner to compute and intimate the appellant, within thirty days of the receipt of this order, of any interest that arises from delayed payment of duty.
Penalties u/ss 76, 77 & 78 of FA, 1994 were also set aside.
In passing : An aside -
Adjudicating authorities are not, any longer, required to appropriate taxes paid by assessees. Such appropriation in adjudication orders are a relic of the times that pre-date self-assessment when amounts deposited during investigation and subsequent proceedings, were required to be appropriated in statutory proceedings before being accounted in the Consolidated Fund of India. The provisions of section 73 of Finance Act, 1994 are applicable in, and limited to, short-levy and non-levy; they do not extend to taxes already paid. Tax already paid into the credit of Consolidated Fund of India does not require another appropriation. Adjudication that resort to appropriation, such as the present one, manifest their lack of clarity about the actual dues recoverable; without the convenient cover of appropriation, adjudicating authority would have had to focus on computation of taxes liable to be recovered. Had that been done, the impugned order would have been appropriately precise.[para 17]
MUMBAI: THE appellant, a subsidiary of M.s General Motors Corporation USA, is a manufacturer of vehicles and, for the production of Spark and Beat, has contracted to receive technical know-how under agreement with M/s General Motors Daewoo Automotive Technologies and M/s General Motors Global Technology Operations, both also being subsidiaries of M/s General Motors Corporation. These are, therefore, associated enterprises of the appellant who provide "intellectual property service" . As the service-providers are based outside India, it devolves on the appellant to discharge tax liability under "reverse charge mechanism" in accordance with section 66A of Finance Act, 1994.
Vide an o-in-o dated 05.11.2012, the CCE, Pune-I has confirmed tax demands of Rs.3,26,83,401 and Rs.6,87,98,709 respectively for the period from April 2009 to June 2010 and from July 2010 to December 2011 and imposed penalty/interest.
It is the case of the department that there was a short-levy at the end of each month since Explanation to Rule 6 of STR, 1994 required the inclusion of debit/credit of any amount relating to royalty in any account, whether called "suspense" ; or otherwise, in taxable consideration where the transaction is between two associated enterprises for determining tax liability.
The explanation inserted after the third proviso in rule 6(1) by Notification 19/2008-ST dated 10.05.2008 read -
Explanation .- For the removal of doubts, it is hereby declared that where the transaction of taxable service is with any associated enterprise, any payment received towards the value of taxable service, in such case shall include any amount credited or debited, as the case may be, to any account, whether called 'Suspense account' or by any other name, in the books of account of a person liable to pay service tax.
The appellant submitted that the original authority has chosen to disregard the fundamental fact that the entries in their books are provisional and solely for the purpose of furnishing Management Information System (MIS) reports to the holding company which are reversed at the time of the final entry at the end of each quarter once the net selling price as well as other details relevant to calculation of dues to the suppliers of know-how are made available. It is further contended that the manner and schedule of payment of dues to suppliers of know-how are embodied in the agreements with the said suppliers. Moreover, the appellant is aggrieved that the original authority has not accorded exemption to the extent of R&D cess available to them. In sum, the claim of the appellant is that the tax has been demanded without considering the actual amount paid to service provider, the contracted frequency of payment and the eligibility for exemption.
Furthermore, it is submitted that the intent in the deeming provision of Rule 6 is limited to debiting the account of the supplier in the books of the recipient for services rendered by associated enterprises and that such addition is mandated only in conjunction with actual payment if such accounting entries have been made.
The AR justified the demand by reiterating the findings of the original authority.
The Member (T) writing for the Bench inter alia observed -
+ The certainty and clarity required of taxing statutes cannot leave such a critical aspect as taxable event to the whims of a contract between two entities or to be conditional upon a perfection sought for in such contracted agreement. The delivery of the service at its destination becomes the taxable event subject, by the law as it then stood, to payment for the service. With the insertion of the Explanation in Rule 6 of Service Tax Rules, 1994, effective from 10 th May 2008 such payment was imbued with a more comprehensive meaning insofar as transaction between associated enterprises is concerned. The value was not restricted to payment per se but was liable to supplemented by accounting entries relating to the service transacted between associated concerns.
+ Contention that royalty is payable every quarter and, that till the introduction of Point of Taxation Rules in 2011, valuation was on "receipt basis" and not on "accrual basis" thereby allowing for tax liability only when consideration is actually payable would have been acceptable had not the Explanation been inserted in Rule 6 owing to which the acknowledgement in the books was sufficient to deem the payment for service to have been effected .
+ Argument (that Explanation is not extendable to such deemed payment because it needs to be read in the context of the phrase "any payment to be received" and since the payment is to be received at quarterly intervals by the service provider, such deemed payment cannot be added for the months where actual payments have not been made ) will not suffice in view of the circumstances that led to insertion of the said Explanation as pointed out in circular of Central Board of Excise & Customs (334/1/2008- TRU dated 29 th February 2008).
+ Between associated enterprises, the certainty of receipts is not tested against the enhancement of cash or bank balance; mere book entries have the effect that it may not have between two independent entities. Such book adjustments often serve to delay or defer tax payment without loss of stakeholder value and this deeming provision aims to disincentivize such tendencies.
+ The deeming effect of the Explanation has to be applied wherever accounting entries relating to the service transaction finds a place in the books of the person liable to pay the tax.
+ A debit entry will have a corresponding credit entry and the existence of such entry with respect to royalty on vehicles manufactured by the appellant during a particular month, without an entry in the supplier' s ledger, suffices for it to be included in the value of taxable service and liable to be taxed by the fifth of the following month.
+ Tax liability has been discharged by the appellant, albeit in a schedule of their own choosing, relying on the principle of "receipt" of consideration by the service provider. As this happens to be at variance with the provisions of Rule 6 of Service Tax Rule, 1994 and Rule 7 of Point of Taxation Rules, 2011, the tax liability needs to be computed for each month on the amount booked in the "royalty accrued" account with the reversal being taken into account whenever that has occurred.
+ Needless to state, in such month, it would be tantamount to taxes paid in advance and liable to be adjusted against taxes due in the month(s) thereafter. Owing to absence of any definite computation in the impugned order and the claim of reversal, as well as that of tax payment, not having been doubted in the impugned order, it would appear that tax liability has indeed been discharged in full though belatedly in some months.
+ As the taxes have been discharged during the period under dispute, the appellant' s liability is limited to interest for the first two months of each quarter to the extent of amount not paid or short-paid. This should have been effected in the impugned order but, not having been done, needs to be remedied.
Conclusion:
We sustain the finding in the impugned order that tax liability of the appellant arises each month for the amount booked, even provisionally, as royalty in their accounts, but with the deductions of amounts paid as R&D cess, (as recorded by us in paragraph no. 14), if any. We set aside the demand for tax in view of findings supra regarding discharge of tax liability and direct the jurisdictional Commissioner to compute and intimate the appellant, within thirty days of the receipt of this order, of any interest that arises from delayed payment of duty.
Penalties u/ss 76, 77 & 78 of FA, 1994 were also set aside.
In passing : An aside -
Adjudicating authorities are not, any longer, required to appropriate taxes paid by assessees. Such appropriation in adjudication orders are a relic of the times that pre-date self-assessment when amounts deposited during investigation and subsequent proceedings, were required to be appropriated in statutory proceedings before being accounted in the Consolidated Fund of India. The provisions of section 73 of Finance Act, 1994 are applicable in, and limited to, short-levy and non-levy; they do not extend to taxes already paid. Tax already paid into the credit of Consolidated Fund of India does not require another appropriation. Adjudication that resort to appropriation, such as the present one, manifest their lack of clarity about the actual dues recoverable; without the convenient cover of appropriation, adjudicating authority would have had to focus on computation of taxes liable to be recovered. Had that been done, the impugned order would have been appropriately precise.[para 17]
Request to NAMO government: A reasonable view taken by assessee must be respected and un-necessary proceedings and litigation by revenue must be avoided. - Year in which assessable - a case of un-necessary litigation by revenue before High Court and the Supreme court, in respect of interest on statutory trust money deposits out of public issue money before of process of allotment, listing and refund.
Relevant references and links:
Commnr. of Income Tax Versus M/s. Henkel Spic India Ltd. 2015 (9) TMI 861 - SUPREME COURT Dated - 04 September 2015
Commissioner of Income Tax Versus Henkel Spic India Ltd. 2003 (12) TMI 45 - MADRAS HIGH COURT Dated - 16 December 2003
Henkel Spic India Limited. Versus Deputy Commissioner Of Income-Tax. 1997 (1) TMI 139 - ITAT MADRAS-A , Dated - 21 January 1997
Sections 69, 73 of the Companies Act, 1956
Rule 40 of the Companies (Central Government&# 39;s) General Rules and Forms, 1956,
Section 88 of the Indian Trusts Act, 1882,
Concepts under consideration:
Money held under trust and legal obligations and interest thereon is not income of trustee.
Accrual of interest as income in case of deposits made out of public issue proceeds before completion of allotment, listing and refund as per law.
Chronological events:
Assessment order dt. 10-1-1996 u/s 143.3 / 147 For AY 1992-93
ITAT order dt. - 21 January 1997
High Courts judgment dt. 16 December 2003
Supreme Courts judgment dt. 04 September 2015
Time gap between date of end of previous year (31.03.1992) and date of judgment of the Supreme Court (04th September 2015): more than 23 years.
Dispute about:
Taxability in assessment year 1992-93 (as per AO) or in AY 1993-94, as per assessee.
AO and CIT(A) held assessable in AY 1992-93.
ITAT, High Court and the Supreme Court held assessable in AY 1993-94.
Question of fact:
In this case the Tribunal after considering all relevant provisions (as stated in references above) and judgments on issue of accrual and accrual as income of assessee held that the interest though related with period ending on 31.03.1992 was not income of assessee for AY 1992-93 and only that portion which remained with assessee after discharge of all obligations to pay principal and interest to applicant was income of assessee in for AY 1993-94.
This is pure finding of fact, therefore, revenue should not have challenged order of Tribunal before the High Court and then the judgment of the High Court before the Supreme Court.
Purpose seeking approach should be adopted:
For revenue it does not make much difference if an income is assessed a year before as against income disclosed by assessee just in next year. In such cases, reasonable view taken by assessee should be respected and accepted and proceedings by way of rectification, revision or reassessment should not be initiated.
However, unfortunately we find that even for small sums and on settled legal positions revenue authorities initiate different proceedings on such issues, which involve un-necessary litigation.
Costs should be allowed in favour of tax payers:
It is ground reality that in many such cases, the revenue is litigating up to Supreme Court on issues which are settled or in any case the assessee has taken a reasonable view.
This case was a fit case, in which the learned AO should have dropped reassessment proceedings for AY 1992-93 because the assessee had taken a very reasonable view and offered income for taxation, just in next year that is AY 1993-94 and paid tax. It is not a case that income had escaped assessment altogether. The dispute was only about assessment year and time gaps was also of only one year.
Therefore, in fact, there was no adoption of purpose seeking approach while making a reassessment. The learned CIT(A) was also not justified in confirming assessment in AY 1992-93. His order forced assessee to appeal before Tribunal.
The order of Tribunal was purely on facts and legal issues were also well settled. Hence there should not be an appeal before High Court.
Thus the litigation before the High Court and the Supreme Court, on behalf of revenue was avoidable.
In this case the Tribunal, the High Court and the Supreme Court did not award cost in favour of tax payer. Awarding costs in favour of assessee and taking some action against authorities who prompt and advance un-necessary litigation can only reduce such un-necessary litigation.
Litigation by revenue vis a vis tax payer:
It is ground reality that taxpayers always take a reasonable view while determining tax liability. In fact, tax payer has to be so because of statutory obligations and liabilities, and to avoid unfavourable actions and events in case of failure to comply with tax laws. A tax authority is not called for even an explanation for say 99 additions made by him are deleted by appellate authority. However, assessee is required to explain even if a small addition made by the tax authority is ultimately confirmed. The tax payer has to pay tax and interest on one addition (out of 100) confirmed and may have to pay penalty and may have to face imprisonment. Therefore, tax payers are generally very careful while determining tax liability.
Whereas, in majority of cases tax authorities are making additions and disallowances knowingly to be wrong and not as per legal position hence making additions just to raise demand so that assessee can be harassed by collection of demands and other coercive measures. There must be provision to penalise tax officers also for making wrong demands- at least demands which are not as per settled legal position.
By: CA DEV KUMAR KOTHARI
Relevant references and links:
Commnr. of Income Tax Versus M/s. Henkel Spic India Ltd. 2015 (9) TMI 861 - SUPREME COURT Dated - 04 September 2015
Commissioner of Income Tax Versus Henkel Spic India Ltd. 2003 (12) TMI 45 - MADRAS HIGH COURT Dated - 16 December 2003
Henkel Spic India Limited. Versus Deputy Commissioner Of Income-Tax. 1997 (1) TMI 139 - ITAT MADRAS-A , Dated - 21 January 1997
Sections 69, 73 of the Companies Act, 1956
Rule 40 of the Companies (Central Government&# 39;s) General Rules and Forms, 1956,
Section 88 of the Indian Trusts Act, 1882,
Concepts under consideration:
Money held under trust and legal obligations and interest thereon is not income of trustee.
Accrual of interest as income in case of deposits made out of public issue proceeds before completion of allotment, listing and refund as per law.
Chronological events:
Assessment order dt. 10-1-1996 u/s 143.3 / 147 For AY 1992-93
ITAT order dt. - 21 January 1997
High Courts judgment dt. 16 December 2003
Supreme Courts judgment dt. 04 September 2015
Time gap between date of end of previous year (31.03.1992) and date of judgment of the Supreme Court (04th September 2015): more than 23 years.
Dispute about:
Taxability in assessment year 1992-93 (as per AO) or in AY 1993-94, as per assessee.
AO and CIT(A) held assessable in AY 1992-93.
ITAT, High Court and the Supreme Court held assessable in AY 1993-94.
Question of fact:
In this case the Tribunal after considering all relevant provisions (as stated in references above) and judgments on issue of accrual and accrual as income of assessee held that the interest though related with period ending on 31.03.1992 was not income of assessee for AY 1992-93 and only that portion which remained with assessee after discharge of all obligations to pay principal and interest to applicant was income of assessee in for AY 1993-94.
This is pure finding of fact, therefore, revenue should not have challenged order of Tribunal before the High Court and then the judgment of the High Court before the Supreme Court.
Purpose seeking approach should be adopted:
For revenue it does not make much difference if an income is assessed a year before as against income disclosed by assessee just in next year. In such cases, reasonable view taken by assessee should be respected and accepted and proceedings by way of rectification, revision or reassessment should not be initiated.
However, unfortunately we find that even for small sums and on settled legal positions revenue authorities initiate different proceedings on such issues, which involve un-necessary litigation.
Costs should be allowed in favour of tax payers:
It is ground reality that in many such cases, the revenue is litigating up to Supreme Court on issues which are settled or in any case the assessee has taken a reasonable view.
This case was a fit case, in which the learned AO should have dropped reassessment proceedings for AY 1992-93 because the assessee had taken a very reasonable view and offered income for taxation, just in next year that is AY 1993-94 and paid tax. It is not a case that income had escaped assessment altogether. The dispute was only about assessment year and time gaps was also of only one year.
Therefore, in fact, there was no adoption of purpose seeking approach while making a reassessment. The learned CIT(A) was also not justified in confirming assessment in AY 1992-93. His order forced assessee to appeal before Tribunal.
The order of Tribunal was purely on facts and legal issues were also well settled. Hence there should not be an appeal before High Court.
Thus the litigation before the High Court and the Supreme Court, on behalf of revenue was avoidable.
In this case the Tribunal, the High Court and the Supreme Court did not award cost in favour of tax payer. Awarding costs in favour of assessee and taking some action against authorities who prompt and advance un-necessary litigation can only reduce such un-necessary litigation.
Litigation by revenue vis a vis tax payer:
It is ground reality that taxpayers always take a reasonable view while determining tax liability. In fact, tax payer has to be so because of statutory obligations and liabilities, and to avoid unfavourable actions and events in case of failure to comply with tax laws. A tax authority is not called for even an explanation for say 99 additions made by him are deleted by appellate authority. However, assessee is required to explain even if a small addition made by the tax authority is ultimately confirmed. The tax payer has to pay tax and interest on one addition (out of 100) confirmed and may have to pay penalty and may have to face imprisonment. Therefore, tax payers are generally very careful while determining tax liability.
Whereas, in majority of cases tax authorities are making additions and disallowances knowingly to be wrong and not as per legal position hence making additions just to raise demand so that assessee can be harassed by collection of demands and other coercive measures. There must be provision to penalise tax officers also for making wrong demands- at least demands which are not as per settled legal position.
By: CA DEV KUMAR KOTHARI
Excise & Customs : CESTAT has power to grant or extend stay of recovery of demand beyond 365 days from date when stay order was initially passed, if delay in disposal of appeal was not attributable to assessee
[2015] 61 taxmann.com 125 (Delhi) (FB)
HIGH COURT OF DELHI (FULL BENCH)
Commissioner of Central Excise, Delhi
v.
Brew Force Machine (P.) Ltd.
[2015] 61 taxmann.com 125 (Delhi) (FB)
HIGH COURT OF DELHI (FULL BENCH)
Commissioner of Central Excise, Delhi
v.
Brew Force Machine (P.) Ltd.
IT: Statutory liability on account of bonus, gratuity and leave encashment does not stand discharged by assessee upon sale of its undertaking on 'as is where is' basis, so as to allow deduction under section 43B
[2015] 61 taxmann.com 222 (Mumbai - Trib.)
IN THE ITAT MUMBAI BENCH 'C'
Pembril Engineering (P.) Ltd.
v.
Deputy Commissioner of Income-tax, Circle-7 (1), Mumbai
[2015] 61 taxmann.com 222 (Mumbai - Trib.)
IN THE ITAT MUMBAI BENCH 'C'
Pembril Engineering (P.) Ltd.
v.
Deputy Commissioner of Income-tax, Circle-7 (1), Mumbai
Revenue should withdraw appeals in cases of tax effect below present prescribed limits for filing of appeals
ALEXANDER GEORGE Versus COMMISSIONER OF INCOME-TAX 2015 (8)TMI 519 - SUPREME COURT
COMMISSIONER OF INCOME-TAX AND ANOTHER Versus CENTURY PARK 2015 (8) TMI 522 - SUPREME COURT
Article -Honourable Supreme Court refused to entertain the appeal of assessee due to low tax effect- with due respect, author feels the urgent need of reconsideration to render justice.
https://www.taxmanagementindia.com/visitor/detail_article.asp?ArticleID=6393 Limits for filing of appeal:
From time to time the Board has increased minimum limit for revenue effect, for taking a decision as to filing of appeal. When revenue impact on disputed issue is lower, the view adopted by the Board is that appeal should not be filed.
The recent Circular is reproduced in this article with highlights. As per Circular being. Instruction No. 5/2014 F No 279/Misc. 142/2007-ITJ (Pt) dated 10.07.2014 revised limit for filing appeals is for each year. As per Circular tax effect for each year is to be considered. Even if appeals are being filed for more than one year and in one year tax effect is higher than for only that year appeal is required to be filed and not for other years in which revenue effect is less than applicable limit.
In view of the author each year is separate and for each year separate appeal is required to be filed before CIT (A)/ ITAT/ High Court and the Supreme Court, as the case may be. For each year time and cost are to be spent to handle all aspects from filing of appeals to the ultimate appeal effect, by revenue and assessee both. Therefore, revenue impact of each year is required to be considered, to avoid litigation on petty matters.
The Board has however, taken view that in case of a composite order, in case of same assessee, cumulative tax effect may be considered. There seems no logic for this view. Because as discussed earlier each year involves separate appeal, even in case of Composite order , each year will entail time and costs. The concerned Court and counsel of revenue and assessee both will have to go through all orders beginning from assessment order in respect of all years.
In view of author, even if more than one appeal is being filed and / or considered at the same time, tax effect for each year should be considered and not total figure for all years.
One more reason is for this view, because for different years different monetary limit may be applicable.
Smaller appeals- less interest:
It is quite natural that in case revenue effect is less, even assesses are not very diligent in attending them. For this reason assessee remains absent and many times cases are adjourned. Even counsels of revenue may not be interested in small cases as compared to cases involving larger amount.
Unproductive work can be reduced:
Withdrawal of appeal by revenue, in cases where tax effect is less than present prescribed limit, will lead to reduce unproductive work and avoid spending of public money. With withdrawal of such appeals, courts will be relieved of many pending cases.
Withdrawal of such smaller appeals will lead to more objectivity in litigation management and Courts will be able to devote more time on appeals involving larger amount.
Even appeal of assessee was dismissed as revenue effect was low:
In case of ALEXANDER GEORGE (supra.) appeal of assessee was dismissed without considering because tax effect was low. However in case of Century Park (supra.) though the Supreme Court impliedly affirmed that monetary limit should be considered retrospectively. However, it was held that appeal should not be dismissed ipso facto, for reason of low revenue effect and restored the matter to High Court to consider other aspects like cascading effect in case of assessee and other assesses.
Withdrawal of appeal should be discretion of appellant:
In view of author, withdrawal of appeal should be in discretion of appellant and Courts should not dismiss appeal of appellant whether appellant be revenue or tax payer. This is because Courts are to render justice. Once an appeal is filed, the Court must decide the appeal based on merits of the case. Even in absence of appellant and / or respondents, to render justice, Court can decide the appeal based on material available.
Approach should be forward looking:
There is no objectivity and purpose in continuing litigation involving smaller issues and smaller implications. Objective assessment and reappraisal should be made to consider withdrawal of appeals of revenue to avoid costly time and money spending on smaller matters that causes lot of attention and therefore, hampers working for matters and issues involving larger monetary consideration.
Current Limits must be considered and appeals involving
Lower tax effect should be withdrawn:
For all practical purposes for fixing the monetary limit, it can be said that even if appeal was filed in past, the maintainability of appeal should be considered in view of present limit. This is because limits have been increased due to reasons like (a) inflation (b) increasing costs in handling appeals and (c) increased exemption limit or reduced tax rates and (d) passage of long time between previous year and consideration of appeal.
However, as stated earlier, the Courts should not dismiss appeals due to lower tax effect it should be discretion of appellant to withdraw appeals.
Therefore, CBDT / CBEC can consider the matter, and take a policy decision to withdraw appeals which have low revenue impact as per present limits and which do not have major cascading impact.
Present circular fixing monetary limit is analysed below with highlights added by author:
Order-Instruction - Income Tax
Instruction No. 5/2014
F No 279/Misc. 142/2007-ITJ (Pt)
Government of India
Ministry of Finance
Department of Revenue
Central Board Direct Taxes
New Delhi the 10th July, 2014
To
All Chief Commissioners of Income-tax and
All Directors General of Income-tax
Subject: Revision of monetary limits for filing of appeals by the Department before Income Tax Appellate Tribunal, High Courts and Supreme Court - measures for reducing litigation - Reg -
Sir/Madam,
Reference is invited to Board's instruction No 3/2011 dated 09/02/2011 wherein monetary limits and other conditions for filing departmental appeals (in Income-tax matters) before Appellate Tribunal, High Courts and Supreme Court were specified.
2. In supersession of the above instruction, it has been decided by the Board that departmental appeals may be filed on merits before Appellate Tribunal, High Courts and Supreme Court keeping in view the monetary limits and conditions specified below.
Henceforth appeals shall not be filed in cases where the tax effect does not exceed the monetary limits given hereunder: -
S. No.
Appeals in Income-tax matters
Monetary Limit (in Rs.)
1.
Before Appellate Tribunal
4,00,000/-
2.
U/s 260 A http://www.taxmanagementindia.com/visitor/detail_act.asp?ID=4114 before High Court
10,00,000/-
3.
Before Supreme Court
25,00,000/-
It is clarified that an appeal should not be filed merely because the tax effect in a case exceeds the monetary limits prescribed above. Filing of appeal in such cases is to be decided on merits of the case.
4. For this purpose, "tax effect" means the difference between the tax on the total income assessed and the tax that would have been chargeable had such total income been reduced by the amount of income in respect of the issues against which appeal is intended to be filed (hereinafter referred to as "disputed issues" ). However the tax will not include any interest thereon, except where chargeability of interest itself is in dispute. In case the chargeability of interest is the issue under dispute, the amount of interest shall be the tax effect. In cases where returned loss is reduced or assessed as income, the tax effect would include notional tax on disputed additions. In case of penalty orders, the tax effect will mean quantum of penalty deleted or reduced in the order to be appealed against
5. The Assessing Officer shall calculate the tax effect separately for every assessment year in respect of the disputed issues in the case of every assessee. If, in the case of an assessee, the disputed issues arise in more than one assessment year, appeal, can be filed in respect of such assessment year or years in which the tax effect in respect of the disputed issues exceeds the monetary limit specified in para 3. No appeal shall be filed in respect of an assessment year or years in which the tax effect is less than the monetary limit specified in para 3. In other words, henceforth, appeals can be filed only with reference to the tax effect in the relevant assessment year. However, in case of a composite order of any High Court or appellate authority, which involves more than one assessment year and common issues in more than one assessment year, appeal shall be filed in respect of all such assessment years even if the 'tax effect' is less than the prescribed monetary limits in any of the year(s), if it is decided to file appeal in respect of the year(s) in which 'tax effect' exceeds the monetary limit prescribed. In case where a composite order / judgement involves more than one assessee, each assessee shall be dealt with separately.
6. In a case where appeal before a Tribunal or a Court is not filed only on account of the tax effect being less than the monetary limit specified above, the Commissioner of Income-tax shall specifically record that "even though the decision is not acceptable, appeal is not being filed only on the consideration that the tax effect is less than the monetary limit specified in this instruction" . Further, in such cases, there will be no presumption that the Income-tax Department has acquiesced in the decision on the disputed issues. The Income-tax Department shall not be precluded from filing an appeal against the disputed issues in the case of the same assessee for any other assessment year, or in the case of any other assessee for the same or any other assessment year, if the tax effect exceeds the specified monetary limits.
7. In the past, a number of instances have come to the notice of the Board, whereby an assessee has claimed relief from the Tribunal or the Court only on the ground that the Department has implicitly accepted the decision of the Tribunal or Court in the case of the assessee for any other assessment year or in the case of any other assessee for the same or any other assessment year, by not filing an appeal on the same disputed issues. The Departmental representatives/ counsels must make every effort to bring to the notice of the Tribunal or the Court that the appeal in such cases was not filed or not admitted only for the reason of the tax effect being less than the specified monetary limit and, therefore, no inference should be drawn that the decisions rendered therein were acceptable to the Department. Accordingly, they should impress upon the Tribunal or the Court that such cases do not have any precedent value. As the evidence of not filing appeal due to this instruction may have to be produced in courts, the judicial folders in the office of CsIT must be maintained in a systemic manner for easy retrieval.
8. Adverse judgments relating to the following issues should be contested on merits notwithstanding that the tax effect entailed is less than the monetary limits specified in para 3 above or there is no tax effect.
(a) Where the Constitutional validity of the provisions of an Act or Rule are under challenge, or
(b) Where Board's order, Notification, Instruction or Circular has been held to be illegal or ultra vires, or
(c) .Where Revenue Audit objection in the case has been accepted by the Department.
9. The proposal for filing Special Leave Petition under Article 136 of the Constitution before the Supreme Court should, in all cases, be sent to the Directorate of Income-tax (Legal & Research), New Delhi and the decision to file Special Leave Petition shall be in consultation with the Ministry of Law and Justice.
10. The monetary limits specified in para 3 above shall not apply to writ matters and direct tax matters other than Income tax. Filing of appeals in other Direct tax matters shall continue to be governed by relevant provisions of statute & rules. Further, filing of appeal in cases of Income Tax, where the tax effect is not quantifiable or not involved, such as the case of registration of trusts or institutions under section 12 A of the IT Act, 1961, shall not be governed by the limits specified in para 3 above and decision to file -appeal in such cases may be taken on merits of a particular case.
11. This instruction will apply to appeals filed on or after 10th July, 2014 However, the cases where appeals have been filed before 10th July, 2014 will be governed by the instructions on this subject, operative at the time when such appeal was filed.
12. This issues under Section 268A (1) of the Income-tax Act 1961.
Yours faithfully
(Priyanka Singh)
(OSD), ITJ, CBDT
By: CA DEV KUMAR KOTHARI
ALEXANDER GEORGE Versus COMMISSIONER OF INCOME-TAX 2015 (8)TMI 519 - SUPREME COURT
COMMISSIONER OF INCOME-TAX AND ANOTHER Versus CENTURY PARK 2015 (8) TMI 522 - SUPREME COURT
Article -Honourable Supreme Court refused to entertain the appeal of assessee due to low tax effect- with due respect, author feels the urgent need of reconsideration to render justice.
https://www.taxmanagementindia.com/visitor/detail_article.asp?ArticleID=6393 Limits for filing of appeal:
From time to time the Board has increased minimum limit for revenue effect, for taking a decision as to filing of appeal. When revenue impact on disputed issue is lower, the view adopted by the Board is that appeal should not be filed.
The recent Circular is reproduced in this article with highlights. As per Circular being. Instruction No. 5/2014 F No 279/Misc. 142/2007-ITJ (Pt) dated 10.07.2014 revised limit for filing appeals is for each year. As per Circular tax effect for each year is to be considered. Even if appeals are being filed for more than one year and in one year tax effect is higher than for only that year appeal is required to be filed and not for other years in which revenue effect is less than applicable limit.
In view of the author each year is separate and for each year separate appeal is required to be filed before CIT (A)/ ITAT/ High Court and the Supreme Court, as the case may be. For each year time and cost are to be spent to handle all aspects from filing of appeals to the ultimate appeal effect, by revenue and assessee both. Therefore, revenue impact of each year is required to be considered, to avoid litigation on petty matters.
The Board has however, taken view that in case of a composite order, in case of same assessee, cumulative tax effect may be considered. There seems no logic for this view. Because as discussed earlier each year involves separate appeal, even in case of Composite order , each year will entail time and costs. The concerned Court and counsel of revenue and assessee both will have to go through all orders beginning from assessment order in respect of all years.
In view of author, even if more than one appeal is being filed and / or considered at the same time, tax effect for each year should be considered and not total figure for all years.
One more reason is for this view, because for different years different monetary limit may be applicable.
Smaller appeals- less interest:
It is quite natural that in case revenue effect is less, even assesses are not very diligent in attending them. For this reason assessee remains absent and many times cases are adjourned. Even counsels of revenue may not be interested in small cases as compared to cases involving larger amount.
Unproductive work can be reduced:
Withdrawal of appeal by revenue, in cases where tax effect is less than present prescribed limit, will lead to reduce unproductive work and avoid spending of public money. With withdrawal of such appeals, courts will be relieved of many pending cases.
Withdrawal of such smaller appeals will lead to more objectivity in litigation management and Courts will be able to devote more time on appeals involving larger amount.
Even appeal of assessee was dismissed as revenue effect was low:
In case of ALEXANDER GEORGE (supra.) appeal of assessee was dismissed without considering because tax effect was low. However in case of Century Park (supra.) though the Supreme Court impliedly affirmed that monetary limit should be considered retrospectively. However, it was held that appeal should not be dismissed ipso facto, for reason of low revenue effect and restored the matter to High Court to consider other aspects like cascading effect in case of assessee and other assesses.
Withdrawal of appeal should be discretion of appellant:
In view of author, withdrawal of appeal should be in discretion of appellant and Courts should not dismiss appeal of appellant whether appellant be revenue or tax payer. This is because Courts are to render justice. Once an appeal is filed, the Court must decide the appeal based on merits of the case. Even in absence of appellant and / or respondents, to render justice, Court can decide the appeal based on material available.
Approach should be forward looking:
There is no objectivity and purpose in continuing litigation involving smaller issues and smaller implications. Objective assessment and reappraisal should be made to consider withdrawal of appeals of revenue to avoid costly time and money spending on smaller matters that causes lot of attention and therefore, hampers working for matters and issues involving larger monetary consideration.
Current Limits must be considered and appeals involving
Lower tax effect should be withdrawn:
For all practical purposes for fixing the monetary limit, it can be said that even if appeal was filed in past, the maintainability of appeal should be considered in view of present limit. This is because limits have been increased due to reasons like (a) inflation (b) increasing costs in handling appeals and (c) increased exemption limit or reduced tax rates and (d) passage of long time between previous year and consideration of appeal.
However, as stated earlier, the Courts should not dismiss appeals due to lower tax effect it should be discretion of appellant to withdraw appeals.
Therefore, CBDT / CBEC can consider the matter, and take a policy decision to withdraw appeals which have low revenue impact as per present limits and which do not have major cascading impact.
Present circular fixing monetary limit is analysed below with highlights added by author:
Order-Instruction - Income Tax
Instruction No. 5/2014
F No 279/Misc. 142/2007-ITJ (Pt)
Government of India
Ministry of Finance
Department of Revenue
Central Board Direct Taxes
New Delhi the 10th July, 2014
To
All Chief Commissioners of Income-tax and
All Directors General of Income-tax
Subject: Revision of monetary limits for filing of appeals by the Department before Income Tax Appellate Tribunal, High Courts and Supreme Court - measures for reducing litigation - Reg -
Sir/Madam,
Reference is invited to Board's instruction No 3/2011 dated 09/02/2011 wherein monetary limits and other conditions for filing departmental appeals (in Income-tax matters) before Appellate Tribunal, High Courts and Supreme Court were specified.
2. In supersession of the above instruction, it has been decided by the Board that departmental appeals may be filed on merits before Appellate Tribunal, High Courts and Supreme Court keeping in view the monetary limits and conditions specified below.
Henceforth appeals shall not be filed in cases where the tax effect does not exceed the monetary limits given hereunder: -
S. No.
Appeals in Income-tax matters
Monetary Limit (in Rs.)
1.
Before Appellate Tribunal
4,00,000/-
2.
U/s 260 A http://www.taxmanagementindia.com/visitor/detail_act.asp?ID=4114 before High Court
10,00,000/-
3.
Before Supreme Court
25,00,000/-
It is clarified that an appeal should not be filed merely because the tax effect in a case exceeds the monetary limits prescribed above. Filing of appeal in such cases is to be decided on merits of the case.
4. For this purpose, "tax effect" means the difference between the tax on the total income assessed and the tax that would have been chargeable had such total income been reduced by the amount of income in respect of the issues against which appeal is intended to be filed (hereinafter referred to as "disputed issues" ). However the tax will not include any interest thereon, except where chargeability of interest itself is in dispute. In case the chargeability of interest is the issue under dispute, the amount of interest shall be the tax effect. In cases where returned loss is reduced or assessed as income, the tax effect would include notional tax on disputed additions. In case of penalty orders, the tax effect will mean quantum of penalty deleted or reduced in the order to be appealed against
5. The Assessing Officer shall calculate the tax effect separately for every assessment year in respect of the disputed issues in the case of every assessee. If, in the case of an assessee, the disputed issues arise in more than one assessment year, appeal, can be filed in respect of such assessment year or years in which the tax effect in respect of the disputed issues exceeds the monetary limit specified in para 3. No appeal shall be filed in respect of an assessment year or years in which the tax effect is less than the monetary limit specified in para 3. In other words, henceforth, appeals can be filed only with reference to the tax effect in the relevant assessment year. However, in case of a composite order of any High Court or appellate authority, which involves more than one assessment year and common issues in more than one assessment year, appeal shall be filed in respect of all such assessment years even if the 'tax effect' is less than the prescribed monetary limits in any of the year(s), if it is decided to file appeal in respect of the year(s) in which 'tax effect' exceeds the monetary limit prescribed. In case where a composite order / judgement involves more than one assessee, each assessee shall be dealt with separately.
6. In a case where appeal before a Tribunal or a Court is not filed only on account of the tax effect being less than the monetary limit specified above, the Commissioner of Income-tax shall specifically record that "even though the decision is not acceptable, appeal is not being filed only on the consideration that the tax effect is less than the monetary limit specified in this instruction" . Further, in such cases, there will be no presumption that the Income-tax Department has acquiesced in the decision on the disputed issues. The Income-tax Department shall not be precluded from filing an appeal against the disputed issues in the case of the same assessee for any other assessment year, or in the case of any other assessee for the same or any other assessment year, if the tax effect exceeds the specified monetary limits.
7. In the past, a number of instances have come to the notice of the Board, whereby an assessee has claimed relief from the Tribunal or the Court only on the ground that the Department has implicitly accepted the decision of the Tribunal or Court in the case of the assessee for any other assessment year or in the case of any other assessee for the same or any other assessment year, by not filing an appeal on the same disputed issues. The Departmental representatives/ counsels must make every effort to bring to the notice of the Tribunal or the Court that the appeal in such cases was not filed or not admitted only for the reason of the tax effect being less than the specified monetary limit and, therefore, no inference should be drawn that the decisions rendered therein were acceptable to the Department. Accordingly, they should impress upon the Tribunal or the Court that such cases do not have any precedent value. As the evidence of not filing appeal due to this instruction may have to be produced in courts, the judicial folders in the office of CsIT must be maintained in a systemic manner for easy retrieval.
8. Adverse judgments relating to the following issues should be contested on merits notwithstanding that the tax effect entailed is less than the monetary limits specified in para 3 above or there is no tax effect.
(a) Where the Constitutional validity of the provisions of an Act or Rule are under challenge, or
(b) Where Board's order, Notification, Instruction or Circular has been held to be illegal or ultra vires, or
(c) .Where Revenue Audit objection in the case has been accepted by the Department.
9. The proposal for filing Special Leave Petition under Article 136 of the Constitution before the Supreme Court should, in all cases, be sent to the Directorate of Income-tax (Legal & Research), New Delhi and the decision to file Special Leave Petition shall be in consultation with the Ministry of Law and Justice.
10. The monetary limits specified in para 3 above shall not apply to writ matters and direct tax matters other than Income tax. Filing of appeals in other Direct tax matters shall continue to be governed by relevant provisions of statute & rules. Further, filing of appeal in cases of Income Tax, where the tax effect is not quantifiable or not involved, such as the case of registration of trusts or institutions under section 12 A of the IT Act, 1961, shall not be governed by the limits specified in para 3 above and decision to file -appeal in such cases may be taken on merits of a particular case.
11. This instruction will apply to appeals filed on or after 10th July, 2014 However, the cases where appeals have been filed before 10th July, 2014 will be governed by the instructions on this subject, operative at the time when such appeal was filed.
12. This issues under Section 268A (1) of the Income-tax Act 1961.
Yours faithfully
(Priyanka Singh)
(OSD), ITJ, CBDT
By: CA DEV KUMAR KOTHARI
I-T - Whether amount payable by assessee u/s 140A, over and above shortfall arising after credit for TDS payment and advance tax, can be considered as tax before processing of return u/s 143(1) - NO: ITAT
MUMBAI: THE issue before the Bench is - Whether the amount payable by the assessee u/s 140A, over and above the shortfall arising after the credit for payment of TDS and advance tax, can be considered as tax before the processing of return u/s 143(1). NO is the answer.
Facts of the case
The assessee company has wrongly mentioned 'excess&# 39; in place of 'shortfall&# 39; of advance tax & TDS paid in the computation of income. This had resulted in less payment of Self assessment tax. Both as per Revenue as well as the assessee, the Apex court in the case of Modi Industries Ltd. vs. CIT 2002-TIOL-446- SC-IT explained that there was no right to get interest except as provided by the statute. The same stands reiterated, more recently, in CIT vs. Gujarat Fluoro Chemicals 2013-TIOL-47- SC-IT-LB, again by its larger bench, explaining its decision in Sandvik Asia Ltd. v. CIT 2006-TIOL-07- SC-IT as being rendered in the peculiar facts of the case, without impacting the settled law in the matter; where it was held that the Legislature by the Act No. 4 of 1988 (w.e.f. 01.04.1989) has inserted Section 244A which provides for interest on refunds under various contingencies. We clarify that it is only that interest provided for under the statute which may be claimed by an assessee from the Revenue and no other interest on such statutory interest. The Apex Court in Union of India vs. Tata Chemicals Ltd. 2014-TIOL-27- SC-IT, relied upon in Stockholding Corporation of India, clarified that the residuary clause (section 244A(1)(b)) shall cover all payments of tax, so that whenever tax was found to have been paid in excess of the amount which the assessee was obliged or otherwise required to pay under any provision of the Act, he shall be entitled to interest, being compensatory, there-under. However, the decision in Gujarat Fluoro Chemicals was also rendered in the context of s. 244A, even as the propositions of law stated in Modi Industries Ltd. would equally apply to refund of tax under the Act. The words of a Statute must prima facie be given their ordinary meaning. When the words are clear, plain and unambiguous, then the Courts are bound to give effect to that meaning irrespective of the consequences. Further, efforts should be made to give meaning to each and every word used by the Legislature and it is not a sound principle of construction to brush aside words in a Statute as being inapposite surpluses, if they can have proper application in circumstances conceivable within the contemplation of the Statute. Reference for the purpose be made to Tata Chemicals Ltd. Also refer, CIT v. Calcutta Knitwears 2014-TIOL-30- SC-IT.
In the present case, the break-up of the prepaid tax of Rs.2057.84 lacs showed the volume of the tax payable as well as the shortfall in advance tax (Rs.4.02 lacs), which clearly suggested no interest u/s. 234B being leviable, which was only where the advance tax fell short of 90% of the assessed tax. The payment of the excess Rs.260.98 lacs (i.e., Rs.265 lacs - Rs.4.02 lacs), adjusted downward for the amount of interest, if any, u/s.234B, cannot be regarded as payment of tax, much less as tax paid (or required to be) by way of self-assessment, or self assessment tax by definition. Tax stands clearly defined u/s. 2(43) to mean income tax chargeable under the provisions of the Act. The payment of advance tax was on the basis of an estimation of current income (section 209), which provision, as well as s. 210, stood noted in Engineers India Ltd., which could therefore be in excess, i.e., without attracting the disqualification of being advance tax. Without doubt, AO can u/s 210 call for the estimation of the assessee' s income for the year, as also the tax for the immediately preceding year, and where found to be in excess of the amount payable in terms of the clear provision, claim the same to be not advance tax. In fact, section 4(2), clearly brings the tax deducted at source or paid in advance within the purview of section 4(1). But for the said provision, the Central Act providing for the charge of income tax and, at a prescribed rate, being applicable from an assessment year, the tax charged could not be recovered during the relevant previous year. The argument shall, therefore, not hold good for prepaid taxes in general, the interest on refund of which is governed by section 244A(1)(a). The payment u/s.140A is to be made after the close of the year, on the basis of the assessee' s own return for the year, as prepared. The payment made in excess of that required to be paid u/s.140A cannot therefore be regarded as payment there-under and, thus, as payment of self-assessment tax. The same does not fall under any other provision as well. Being not chargeable u/s. 4(1), it cannot be regarded as payment of tax, which cannot be so merely for the reason that the assessee had chosen to pay it. The same simply represents the deposit, made on an ad hoc basis, without any basis in fact or in law.
It was also pointed out that as per law refund can be granted only on tax (or penalty), or even of interest, i.e., of a payment made under any provision of the Act. The said excess assumes the character of tax upon processing of the assessee' s return or on making the assessment for the relevant year. It may be appreciated that prior to this point in time, the A.O. had no power to refund the amount. It was only on the processing of the return of income, mandatory in all cases, setting off the said payment against the assessee' s tax liability for the year, i.e., by regarding it as paid toward tax, that the same assumes the character of a tax paid, entitled to refund u/s.143(1) r/w s. 237. Even so, it would be tax paid on processing (or assessment), and not as self assessment tax. Reference in this regard may be made to the decision in the case of Modi Industries Ltd. It was explained therein that once the amount of advance tax was treated as payment of tax in respect of income of the relevant previous year and credit as such for the amount has been given in the assessment order, the amount looses the character of advance tax, and becomes income tax in respect of income for the year. The Apex Court clarified this while analysing the interest allowed u/s.214 i.e., on refund of advance-tax, which was, as in the case of 244A, from the first day of the relevant assessment year, to the date of the assessment order. Reference was also made to illustrate the manner whereby an amount paid changes its character on assessment, i.e., on being allowed credit against the tax on income for the relevant previous year. The amount of excess, paid, thus, de hors any provision of law, would, nevertheless, come to be regarded as toward tax on the adjustment afore-said. The Intimation u/s.143(1) determining the amount payable was deemed notice of demand u/s.156, vide proviso thereto.
Prior to the processing/assessme nt, the A.O. was not empowered to take cognizance of this amount, much less refund it. In fact, even if therefore regarded as payment of tax from the date of payment of sum, i.e., in excess of that payable on the basis of the return, the delay in its refund, i.e., up to the date of processing/assessme nt, was attributable to the assessee and, as such, no interest would stand to be allowed for the period commencing from the date of payment to the date of adjustment as income tax in respect of income for the relevant previous year. This, then, provides the second, alternate reason for allowing interest on the excess payment (of Rs.2.61 crores) only from the date of processing of the payment of the return, and not from the date of actual payment. Further, the date of payment is to be given the meaning specified under the Act, and cannot, in view thereof, be read de hors the same, i.e., giving its plain meaning. When the statute gives a particular meaning to a particular set of words, interpretation has to be made accordingly. The apex court in West Bengal State Warehousing Corporation vs. Indrapuri Studio Pvt. Ltd. (in Civil Appeal No. 3865 of 2006 dated 19.10.2010) held that the use of the word 'means&# 39; in a definition signifies a hard and fast definition.
Having heard the matter, the Tribunal held that,
++ the Apex Court as per its larger bench decisions in Modi Industries Ltd. and Gujarat Fluoro Chemicals settled that there is no right to get interest of refund except as provided by the statute. The proposition of the interest being exigible on any amount paid, irrespective of either any obligation to pay or even its character under the Act, and from the date of its payment (i.e., except in the case of prepaid tax), cannot, in view thereof, be countenanced. Section 244A covers the allowance of interest on refund arising on payment of tax or penalty under the Act, and is a separate code in itself, providing for both the right to interest as well as the manner of its computation, including the resolution of any dispute qua the determination of the issue of the attribution of the delay, if any, in the grant of refund. The provision is to read in terms of its clear language, albeit holistically, following the cardinal principles of the interpretation of statutes, as clarified by the apex court in, inter alia, Tata Chemicals Ltd. Words assigned a particular meaning shall have to be interpreted strictly. The tax refund is, by definition, refund of tax paid under whatsoever provision in excess of the tax liability under the Act, as finally determined (Tata Chemicals Ltd.). The amount, however, ought to be paid by way of tax, in discharge of an obligation cast or required to be paid under any provision of law. Interest, though compensatory, may not necessarily follow for any excess payment and, further, has to be only of excess tax paid to the Revenue, for the period provided by the specific provision of law. The same can supply the termini points, which could either be actual or artificial. For prepaid taxes, it is, irrespective of the date of payment, the first day of the relevant AY. In all other cases, it is the date of payment of tax as provided for, i.e., the date of payment in excess of the amount thereof as specified in the notice of demand. The same is to be given a strict meaning. As such, it refers to the actual date of payment provided that what is paid is tax. As a natural corollary, it is the date on which the amount assumes the character of tax;
++ where an amount is paid with reference to or in violation of the provision, it cannot be said to be paid there-under. Section 140A requires payment of tax on the basis of the return, where-under only the assessee is to prefer his claims under the Act. The same, thus, contemplates an assessment by the assessee of its tax liability under the Act, as crystallized per the return finalized, i.e., for filing under the Act, paying the shortfall there-under, if any, along with the interest to date. How could it, even where not unambiguously worded, be otherwise, i.e., follow as it does the scheme of the Act. Any amount paid over and above the said shortfall cannot be regarded as tax, which, by definition, is that chargeable under the Act. [ss.2(43) r/w s. 4]. To regard any amount deposited as self assessment tax would be to do violence to the clear language of the provision of the Act, as well as its scheme. The said case excess, however, on being allowed credit for against the tax payable, assumes the character of tax, i.e., upon the processing of the return for the relevant year, filed subsequently by the assessee, which constitutes a notice of demand u/s.156, vide proviso thereto. Prior thereto, AO cannot take cognizance thereof, much less refund it. This, then, is the earliest point of time at which such excess can be regarded as payment of tax, exigible to refund u/s. 143(1) r/w s. 237. Not so regarding would make the machinery unworkable and prejudicial to the assessee. The assessee shall, therefore, be entitled to refund from this date to that of the grant of the refund. The amount cannot be regarded as payment of tax at any point of time earlier to the date of credit referred to at para (g) above, i.e., prior to the processing of the return of income resulting in the refund. Even otherwise, the delay in the grant of refund, i.e., for the intervening period between the date of payment and date of processing of return, is to be necessarily ascribed to the assessee, disentitling him for the interest for the said period. As such, even regarding it as payment of tax from inception, i.e., for the sake of argument, would be of little moment. Our decision is consistent with the said law as explained by SC as per its decisions referred to earlier and, further, also the judgment by the jurisdictional HC in Stockholding Corporation of India. The latter, in ratio, decides the issue of grant of interest u/s.244A on the payment of self assessment tax, and from the date of its payment. The interest being allowed in the present case, i.e., on the excess amount paid with reference to the return, is only tax and not of self assessment tax, i.e., paid on self assessment on the basis of the return, so that it would not be from the anterior in time to it being regarded as tax;
++ we are fortified in our stand by the decision in Engineers India Ltd., rendered after considering other decisions in the matter. The Court, firstly, observes with reference to Gujarat Fluoro Chemicals that there was no liability on the Revenue to pay interest on refund beyond the liability created by the statutory provisions, noting that in Tata Chemicals Ltd. the collection of tax was subsequently found illegal (para 33). As such, there was no general rule that whenever a refund of income tax paid in excess is to be made, the Revenue must necessarily pay interest on the refund amount. It is the Revenue or the assessee, whoever is responsible for the excess payment, which must bear the interest burden or, as the case may be, loss of interest (para 34). The assessee having paid to in excess, as found per Intimation u/s. 143(1), was not entitled to interest thereon or prior thereto;
++ we have, it may be noted, applying the decision in Modi Industries Ltd, stated that in-as-much as the credit is allowed for such payment, and only rightly so, against tax payable on the basis of the return, i.e., upon its processing u/s. 143(1), the same assumes the character of tax on such adjustment, so that interest shall arise to the assessee from that date up to the date of grant of refund. The jurisdictional High Court also observed this at para 8 of its Judgment in Stockholding Corporation of India, stating that the A.O. passed the assessment order on 31.12.1996, accepting the entire amount paid as self assessment tax as payment of tax. In the facts of the case, the refund to the extent of Rs.260.98 lacs, adjusted for the amount of interest u/s.234B, if any, up to 31.05.1994, shall arise only subsequent to the date of processing u/s.143(1), i.e., up to the date of grant of refund. In-as-much as the law does not contemplate grant of refund exclusive of interest, the same must necessarily be worked out at gross of interest u/s.244A up to the date of refund. The shortfall, if any, of the refund amount with reference to the amount so computed, would, therefore, have to be apportioned between the principal (tax) and interest amounts, so that interest u/s.244A shall arise on the un-refunded tax, while no interest u/s.244A is exigible under the Act on the unpaid interest there-under. The balance tax refund of Rs.20.98 lacs (i.e., Rs.2061.86 lacs - Rs.2040.88 lacs), would be governed by s. 244A(1)(a). We decide accordingly. In the result, the assessee' s appeal is allowed on the afore-said terms.
MUMBAI: THE issue before the Bench is - Whether the amount payable by the assessee u/s 140A, over and above the shortfall arising after the credit for payment of TDS and advance tax, can be considered as tax before the processing of return u/s 143(1). NO is the answer.
Facts of the case
The assessee company has wrongly mentioned 'excess&# 39; in place of 'shortfall&# 39; of advance tax & TDS paid in the computation of income. This had resulted in less payment of Self assessment tax. Both as per Revenue as well as the assessee, the Apex court in the case of Modi Industries Ltd. vs. CIT 2002-TIOL-446- SC-IT explained that there was no right to get interest except as provided by the statute. The same stands reiterated, more recently, in CIT vs. Gujarat Fluoro Chemicals 2013-TIOL-47- SC-IT-LB, again by its larger bench, explaining its decision in Sandvik Asia Ltd. v. CIT 2006-TIOL-07- SC-IT as being rendered in the peculiar facts of the case, without impacting the settled law in the matter; where it was held that the Legislature by the Act No. 4 of 1988 (w.e.f. 01.04.1989) has inserted Section 244A which provides for interest on refunds under various contingencies. We clarify that it is only that interest provided for under the statute which may be claimed by an assessee from the Revenue and no other interest on such statutory interest. The Apex Court in Union of India vs. Tata Chemicals Ltd. 2014-TIOL-27- SC-IT, relied upon in Stockholding Corporation of India, clarified that the residuary clause (section 244A(1)(b)) shall cover all payments of tax, so that whenever tax was found to have been paid in excess of the amount which the assessee was obliged or otherwise required to pay under any provision of the Act, he shall be entitled to interest, being compensatory, there-under. However, the decision in Gujarat Fluoro Chemicals was also rendered in the context of s. 244A, even as the propositions of law stated in Modi Industries Ltd. would equally apply to refund of tax under the Act. The words of a Statute must prima facie be given their ordinary meaning. When the words are clear, plain and unambiguous, then the Courts are bound to give effect to that meaning irrespective of the consequences. Further, efforts should be made to give meaning to each and every word used by the Legislature and it is not a sound principle of construction to brush aside words in a Statute as being inapposite surpluses, if they can have proper application in circumstances conceivable within the contemplation of the Statute. Reference for the purpose be made to Tata Chemicals Ltd. Also refer, CIT v. Calcutta Knitwears 2014-TIOL-30- SC-IT.
In the present case, the break-up of the prepaid tax of Rs.2057.84 lacs showed the volume of the tax payable as well as the shortfall in advance tax (Rs.4.02 lacs), which clearly suggested no interest u/s. 234B being leviable, which was only where the advance tax fell short of 90% of the assessed tax. The payment of the excess Rs.260.98 lacs (i.e., Rs.265 lacs - Rs.4.02 lacs), adjusted downward for the amount of interest, if any, u/s.234B, cannot be regarded as payment of tax, much less as tax paid (or required to be) by way of self-assessment, or self assessment tax by definition. Tax stands clearly defined u/s. 2(43) to mean income tax chargeable under the provisions of the Act. The payment of advance tax was on the basis of an estimation of current income (section 209), which provision, as well as s. 210, stood noted in Engineers India Ltd., which could therefore be in excess, i.e., without attracting the disqualification of being advance tax. Without doubt, AO can u/s 210 call for the estimation of the assessee' s income for the year, as also the tax for the immediately preceding year, and where found to be in excess of the amount payable in terms of the clear provision, claim the same to be not advance tax. In fact, section 4(2), clearly brings the tax deducted at source or paid in advance within the purview of section 4(1). But for the said provision, the Central Act providing for the charge of income tax and, at a prescribed rate, being applicable from an assessment year, the tax charged could not be recovered during the relevant previous year. The argument shall, therefore, not hold good for prepaid taxes in general, the interest on refund of which is governed by section 244A(1)(a). The payment u/s.140A is to be made after the close of the year, on the basis of the assessee' s own return for the year, as prepared. The payment made in excess of that required to be paid u/s.140A cannot therefore be regarded as payment there-under and, thus, as payment of self-assessment tax. The same does not fall under any other provision as well. Being not chargeable u/s. 4(1), it cannot be regarded as payment of tax, which cannot be so merely for the reason that the assessee had chosen to pay it. The same simply represents the deposit, made on an ad hoc basis, without any basis in fact or in law.
It was also pointed out that as per law refund can be granted only on tax (or penalty), or even of interest, i.e., of a payment made under any provision of the Act. The said excess assumes the character of tax upon processing of the assessee' s return or on making the assessment for the relevant year. It may be appreciated that prior to this point in time, the A.O. had no power to refund the amount. It was only on the processing of the return of income, mandatory in all cases, setting off the said payment against the assessee' s tax liability for the year, i.e., by regarding it as paid toward tax, that the same assumes the character of a tax paid, entitled to refund u/s.143(1) r/w s. 237. Even so, it would be tax paid on processing (or assessment), and not as self assessment tax. Reference in this regard may be made to the decision in the case of Modi Industries Ltd. It was explained therein that once the amount of advance tax was treated as payment of tax in respect of income of the relevant previous year and credit as such for the amount has been given in the assessment order, the amount looses the character of advance tax, and becomes income tax in respect of income for the year. The Apex Court clarified this while analysing the interest allowed u/s.214 i.e., on refund of advance-tax, which was, as in the case of 244A, from the first day of the relevant assessment year, to the date of the assessment order. Reference was also made to illustrate the manner whereby an amount paid changes its character on assessment, i.e., on being allowed credit against the tax on income for the relevant previous year. The amount of excess, paid, thus, de hors any provision of law, would, nevertheless, come to be regarded as toward tax on the adjustment afore-said. The Intimation u/s.143(1) determining the amount payable was deemed notice of demand u/s.156, vide proviso thereto.
Prior to the processing/assessme nt, the A.O. was not empowered to take cognizance of this amount, much less refund it. In fact, even if therefore regarded as payment of tax from the date of payment of sum, i.e., in excess of that payable on the basis of the return, the delay in its refund, i.e., up to the date of processing/assessme nt, was attributable to the assessee and, as such, no interest would stand to be allowed for the period commencing from the date of payment to the date of adjustment as income tax in respect of income for the relevant previous year. This, then, provides the second, alternate reason for allowing interest on the excess payment (of Rs.2.61 crores) only from the date of processing of the payment of the return, and not from the date of actual payment. Further, the date of payment is to be given the meaning specified under the Act, and cannot, in view thereof, be read de hors the same, i.e., giving its plain meaning. When the statute gives a particular meaning to a particular set of words, interpretation has to be made accordingly. The apex court in West Bengal State Warehousing Corporation vs. Indrapuri Studio Pvt. Ltd. (in Civil Appeal No. 3865 of 2006 dated 19.10.2010) held that the use of the word 'means&# 39; in a definition signifies a hard and fast definition.
Having heard the matter, the Tribunal held that,
++ the Apex Court as per its larger bench decisions in Modi Industries Ltd. and Gujarat Fluoro Chemicals settled that there is no right to get interest of refund except as provided by the statute. The proposition of the interest being exigible on any amount paid, irrespective of either any obligation to pay or even its character under the Act, and from the date of its payment (i.e., except in the case of prepaid tax), cannot, in view thereof, be countenanced. Section 244A covers the allowance of interest on refund arising on payment of tax or penalty under the Act, and is a separate code in itself, providing for both the right to interest as well as the manner of its computation, including the resolution of any dispute qua the determination of the issue of the attribution of the delay, if any, in the grant of refund. The provision is to read in terms of its clear language, albeit holistically, following the cardinal principles of the interpretation of statutes, as clarified by the apex court in, inter alia, Tata Chemicals Ltd. Words assigned a particular meaning shall have to be interpreted strictly. The tax refund is, by definition, refund of tax paid under whatsoever provision in excess of the tax liability under the Act, as finally determined (Tata Chemicals Ltd.). The amount, however, ought to be paid by way of tax, in discharge of an obligation cast or required to be paid under any provision of law. Interest, though compensatory, may not necessarily follow for any excess payment and, further, has to be only of excess tax paid to the Revenue, for the period provided by the specific provision of law. The same can supply the termini points, which could either be actual or artificial. For prepaid taxes, it is, irrespective of the date of payment, the first day of the relevant AY. In all other cases, it is the date of payment of tax as provided for, i.e., the date of payment in excess of the amount thereof as specified in the notice of demand. The same is to be given a strict meaning. As such, it refers to the actual date of payment provided that what is paid is tax. As a natural corollary, it is the date on which the amount assumes the character of tax;
++ where an amount is paid with reference to or in violation of the provision, it cannot be said to be paid there-under. Section 140A requires payment of tax on the basis of the return, where-under only the assessee is to prefer his claims under the Act. The same, thus, contemplates an assessment by the assessee of its tax liability under the Act, as crystallized per the return finalized, i.e., for filing under the Act, paying the shortfall there-under, if any, along with the interest to date. How could it, even where not unambiguously worded, be otherwise, i.e., follow as it does the scheme of the Act. Any amount paid over and above the said shortfall cannot be regarded as tax, which, by definition, is that chargeable under the Act. [ss.2(43) r/w s. 4]. To regard any amount deposited as self assessment tax would be to do violence to the clear language of the provision of the Act, as well as its scheme. The said case excess, however, on being allowed credit for against the tax payable, assumes the character of tax, i.e., upon the processing of the return for the relevant year, filed subsequently by the assessee, which constitutes a notice of demand u/s.156, vide proviso thereto. Prior thereto, AO cannot take cognizance thereof, much less refund it. This, then, is the earliest point of time at which such excess can be regarded as payment of tax, exigible to refund u/s. 143(1) r/w s. 237. Not so regarding would make the machinery unworkable and prejudicial to the assessee. The assessee shall, therefore, be entitled to refund from this date to that of the grant of the refund. The amount cannot be regarded as payment of tax at any point of time earlier to the date of credit referred to at para (g) above, i.e., prior to the processing of the return of income resulting in the refund. Even otherwise, the delay in the grant of refund, i.e., for the intervening period between the date of payment and date of processing of return, is to be necessarily ascribed to the assessee, disentitling him for the interest for the said period. As such, even regarding it as payment of tax from inception, i.e., for the sake of argument, would be of little moment. Our decision is consistent with the said law as explained by SC as per its decisions referred to earlier and, further, also the judgment by the jurisdictional HC in Stockholding Corporation of India. The latter, in ratio, decides the issue of grant of interest u/s.244A on the payment of self assessment tax, and from the date of its payment. The interest being allowed in the present case, i.e., on the excess amount paid with reference to the return, is only tax and not of self assessment tax, i.e., paid on self assessment on the basis of the return, so that it would not be from the anterior in time to it being regarded as tax;
++ we are fortified in our stand by the decision in Engineers India Ltd., rendered after considering other decisions in the matter. The Court, firstly, observes with reference to Gujarat Fluoro Chemicals that there was no liability on the Revenue to pay interest on refund beyond the liability created by the statutory provisions, noting that in Tata Chemicals Ltd. the collection of tax was subsequently found illegal (para 33). As such, there was no general rule that whenever a refund of income tax paid in excess is to be made, the Revenue must necessarily pay interest on the refund amount. It is the Revenue or the assessee, whoever is responsible for the excess payment, which must bear the interest burden or, as the case may be, loss of interest (para 34). The assessee having paid to in excess, as found per Intimation u/s. 143(1), was not entitled to interest thereon or prior thereto;
++ we have, it may be noted, applying the decision in Modi Industries Ltd, stated that in-as-much as the credit is allowed for such payment, and only rightly so, against tax payable on the basis of the return, i.e., upon its processing u/s. 143(1), the same assumes the character of tax on such adjustment, so that interest shall arise to the assessee from that date up to the date of grant of refund. The jurisdictional High Court also observed this at para 8 of its Judgment in Stockholding Corporation of India, stating that the A.O. passed the assessment order on 31.12.1996, accepting the entire amount paid as self assessment tax as payment of tax. In the facts of the case, the refund to the extent of Rs.260.98 lacs, adjusted for the amount of interest u/s.234B, if any, up to 31.05.1994, shall arise only subsequent to the date of processing u/s.143(1), i.e., up to the date of grant of refund. In-as-much as the law does not contemplate grant of refund exclusive of interest, the same must necessarily be worked out at gross of interest u/s.244A up to the date of refund. The shortfall, if any, of the refund amount with reference to the amount so computed, would, therefore, have to be apportioned between the principal (tax) and interest amounts, so that interest u/s.244A shall arise on the un-refunded tax, while no interest u/s.244A is exigible under the Act on the unpaid interest there-under. The balance tax refund of Rs.20.98 lacs (i.e., Rs.2061.86 lacs - Rs.2040.88 lacs), would be governed by s. 244A(1)(a). We decide accordingly. In the result, the assessee' s appeal is allowed on the afore-said terms.
Direct Tax Basket
2015-TIOL-1486- ITAT-PUNE
Finolex Cables Ltd Vs DCIT
Whether income from sale of scrap can be treated as income from industrial undertaking for the purpose of deduction u/s. 80IB - Whether once, it has become a part of block of assets on which the depreciation has been allowed for the three AYs, the depreciation can be denied in the subsequent AYs on the written down value. - Assessee' s appeal allowed : PUNE ITAT
2015-TIOL-1485- ITAT-MUM
ACIT Vs M/s Gravis Foods Pvt Ltd
Whether the expenditure incurred on account of salaries, wages, marketing expenditure, professional fee, travelling etc. is allowable as revenue expenditure - Whether ice-cream and 'Mawa' are dairy products - Whether assessee is entitled to deduction u/s 37(1) in respect of expenditure incurred towards cancellation of project involving manufacturing and sale of Khoa where the ice-cream and the Mawa are covered by the nature of declared business of the assessee and the impugned expenditure claimed by the assessee does not include any expenditure of capital nature and the control and management, accounts, CEOs for both the dairy /milk products is one and the same. - Revenue' s Appeal dismissed : MUMBAI ITAT
Indirect Tax Basket
CENTRAL EXCISE SECTION
2015-TIOL-1986- CESTAT-MAD
M/s U V Boards Ltd Vs CCE
Central Excise - CENVAT credit - Guarantor of bank loan issued debit note to the appellant to meet the cost of guarantee service paid to the bank - Revenue viewed the entire credit availed on BFS inadmissible, denied the same in adjudication - appellant' s availment of input service credit corresponding to the element of guarantee service is disputed herein.
Held: Availing of the banker's service in the business world is inevitable; hence banking and financial services provided to the appellant through a guarantor may not be ruled out - Usually when guarantee is provided that has always been supported by a guarantor - It was left open to examine by the authorities below from the banker to ascertain the amount of service tax involved; Without such examination mechanical disallowance of CENVAT credit is unwarranted. [Para 5] - Appeal allowed : CHENNAI CESTAT
2015-TIOL-1985- CESTAT-MUM
M/s Shriram Coating Vs CCE
CX - Maintainability of appeal - s.35B of CEA, 1944 - Duty amount involved in the case is Rs.11,605/- impugned order was passed by Commissioner( A) u/s 35A which is specified under clause (b) of s.s(1) of s.35B - Tribunal has discretion to refuse to admit such appeal where the amount involved does not exceed Rs.50,000/- (before 06/08/2014) or Rs.2 lakhs (after 06/08/2014) - Appeal dismissed only on the ground that the amount involved is below threshold limit of Rs.50,000/- without going into the merit of the case: CESTAT [para 3, 4] - Appeal dismissed : MUMBAI CESTAT
2015-TIOL-1486- ITAT-PUNE
Finolex Cables Ltd Vs DCIT
Whether income from sale of scrap can be treated as income from industrial undertaking for the purpose of deduction u/s. 80IB - Whether once, it has become a part of block of assets on which the depreciation has been allowed for the three AYs, the depreciation can be denied in the subsequent AYs on the written down value. - Assessee' s appeal allowed : PUNE ITAT
2015-TIOL-1485- ITAT-MUM
ACIT Vs M/s Gravis Foods Pvt Ltd
Whether the expenditure incurred on account of salaries, wages, marketing expenditure, professional fee, travelling etc. is allowable as revenue expenditure - Whether ice-cream and 'Mawa' are dairy products - Whether assessee is entitled to deduction u/s 37(1) in respect of expenditure incurred towards cancellation of project involving manufacturing and sale of Khoa where the ice-cream and the Mawa are covered by the nature of declared business of the assessee and the impugned expenditure claimed by the assessee does not include any expenditure of capital nature and the control and management, accounts, CEOs for both the dairy /milk products is one and the same. - Revenue' s Appeal dismissed : MUMBAI ITAT
Indirect Tax Basket
CENTRAL EXCISE SECTION
2015-TIOL-1986- CESTAT-MAD
M/s U V Boards Ltd Vs CCE
Central Excise - CENVAT credit - Guarantor of bank loan issued debit note to the appellant to meet the cost of guarantee service paid to the bank - Revenue viewed the entire credit availed on BFS inadmissible, denied the same in adjudication - appellant' s availment of input service credit corresponding to the element of guarantee service is disputed herein.
Held: Availing of the banker's service in the business world is inevitable; hence banking and financial services provided to the appellant through a guarantor may not be ruled out - Usually when guarantee is provided that has always been supported by a guarantor - It was left open to examine by the authorities below from the banker to ascertain the amount of service tax involved; Without such examination mechanical disallowance of CENVAT credit is unwarranted. [Para 5] - Appeal allowed : CHENNAI CESTAT
2015-TIOL-1985- CESTAT-MUM
M/s Shriram Coating Vs CCE
CX - Maintainability of appeal - s.35B of CEA, 1944 - Duty amount involved in the case is Rs.11,605/- impugned order was passed by Commissioner( A) u/s 35A which is specified under clause (b) of s.s(1) of s.35B - Tribunal has discretion to refuse to admit such appeal where the amount involved does not exceed Rs.50,000/- (before 06/08/2014) or Rs.2 lakhs (after 06/08/2014) - Appeal dismissed only on the ground that the amount involved is below threshold limit of Rs.50,000/- without going into the merit of the case: CESTAT [para 3, 4] - Appeal dismissed : MUMBAI CESTAT
Direct Tax Basket
2015-TIOL-2201- HC-P&H-IT
CIT Vs Indra Sen Aggarwal
Whether it is open to the Tribunal to set aside the order of CIT(A) made u/s 263, by merely passing a non-speaking order and without giving any detailed reasons for the same - NO: HC - Case remanded : PUNJAB AND HARYANA HIGH COURT
2015-TIOL-2200- HC-MUM-IT
CIT Vs Sudhir S Jhunjhunwala
Whether additional evidence filed by the assessee should be allowed, when there was sufficient ground to admit the same - YES: HC
Whether question of failure to produce the necessary evidence before the original authority and the reasons for that failure are all questions of appreciation of facts, therefore in the absence of such findings, no question of law arises - YES: HC - Revenue' s appeal dismissed : BOMBAY HIGH COURT
2015-TIOL-2199- HC-MUM-IT
CIT Vs Shri Vinayak Digamber Kharote
Whether the AO is not empowered to deal with the claim of deduction, which had not found a place either in the return of income or in the revised return of income filed before the Assessing Officer - YES: HC - Revenue' s appeal dismissed : BOMBAY HIGH COURT
2015-TIOL-2198- HC-DEL-IT
CIT Vs Chetan Gupta
Whether reassessment proceeding initiated against the assessee is valid where the notice issued under section 148 was not served to the assessee at the address provided by him - Whether issue of notice to the Assessee and service of such notice upon the Assessee are jurisdictional requirements that must be mandatorily complied with - Whether participation of Assessee or some other person on his behalf not duly authorised in the reassessment proceedings after coming to know of it, will constitute a waiver of the requirement of effecting proper service of notice on the Assessee under Section 148 of the Act - Whether reassessment proceedings finalised by an AO without effecting proper service of notice on the Assessee under Section 148 (1) of the Act are invalid. - Revenue' s appeal dismissed : DELHI HIGH COURT
2015-TIOL-2197- HC-DEL-IT
PCIT Vs Maharaja Appliances Ltd
Whether when the assessee has produced the necessary details before the CIT(A), on the basis of which it has reduced the disallowance proportionate to the expenditure incurred on behalf of its sister concerns, the Tribunal has also confirmed the same, is it still possible to disallow it further on the basis of factual circumstances - NO: HC - Revenue' s appeal dismissed : DELHI HIGH COURT
2015-TIOL-2196- HC-KAR-IT
M/s Embassy Development Corporation Vs ACIT
Whether an assessee can be believed to have availed loan with interest @ 18.5% p.a. to book a flat, in a project for which neither the plan has been sanctioned by the competent authorities nor the construction has been started - NO: HC
Whether advances made to a sister concern in respect of acquisition of a residential project can be treated as business expidiency, in case there is no work in progress or no advance to the material suppliers has been made for the said project by te said sister concern - NO: HC
Whether it is open to the assessee to claim deduction towards interest expenditure incurred for availing loan, which was subsequently advanced to its sister concern in above mentioned circumstances - NO: HC - Assessee' s appeals dismissed : KARNATKA HIGH COURT
2015-TIOL-2195- HC-ALL-IT
M/s District Cooperative Bank Ltd Vs DCIT
Whether it is open to the AO to issue notice u/s 148 merely because the audit report has opined that certain expenses were not allowable u/s 36(1)(viia), when the P&L account was duly scrutinized and only thereafter the net loss was determined by the AO - NO: HC
Whether notice issued u/s 148 initiating reassessment proceeding deserves to be quashed, where the foundational requirement for issuance of such notice was lacking and the condition precedent for initiating a valid reassessment was absent - YES: HC - Assessee' s petition allowed : ALLAHABAD HIGH COURT
2015-TIOL-2194- HC-ALL-IT
Shri Badri Nath Agnihotri Vs ITO
Whether it is not proper for the High Court to interfere with the order of the AO, when the order by the AO under Section 220 (6), is not under challenge, before HC - YES: HC - Assessee' s petition dismissed : ALLAHABAD HIGH COURT
2015-TIOL-1489- ITAT-MUM + Story
Raymond Ltd Vs DCIT
Whether the amount payable by the assessee u/s 140A, over and above the shortfall arising after the credit for payment of TDS and advance tax, can be considered as tax before the processing of return u/s 143(1) - NO: ITAT
Whether the interest to be paid on the excess amount paid with reference to the income tax return filed, is payable only on the tax amount paid in excess and not on self assessment tax, which is paid on self assessment on the basis of finalistion of the return - NO: ITAT - Assessee' s appeal allowed : MUMBAI ITAT
2015-TIOL-1488- ITAT-AHM
M/s Suzlon Energy Ltd Vs ACIT
Whether disallowance of interest expenditure u/s 14A is justified where interest free own funds of the assessee are many times more than its investment and there was nothing on record to suggest any direct nexus between interest bearing borrowed funds and investment in Indian subsidiaries - Whether deduction under section 80-IB is allowable in respect of interest income - Whether only net interest only should be considered for reducing from profits of business for computing deduction u/s.80-IB - Whether disallowance on account of commission payment is justified where the assessee had given evidence that the recipient of the commission provided information in respect of services which helped the sales to mature and realise and all units of assessee was eligible for deduction u/s. 80IB - Whether penalty u/s 271(1)(c) is leviable where in quantum appeal the Tribunal remitted the matter back to Assessing Officer - Whether penalty u/s 271(1)(c) is leviable where assessee has furnished all the details and has neither consciously concealed any income nor has evaded any tax - Whether assessee is liable to deduct tax at source on interest paid by it on Foreign Currency Convertible Bonds to nonresident investor which is specifically excluded from the deeming provisions as per S. 9(1)(v)(b). - Assessee' s appeal partly allowed : AHMEDABAD ITAT
Indirect Tax Basket
SERVICE TAX SECTION
2015-TIOL-2207- HC-P&H-ST
Municipal Corporation Vs CCE & ST
Service Tax - Appeal against the order of Tribunal directing pre-deposit of Service Tax demanded along with interest - The appellant charged licence fee and advertisement tax on the service of sale of space for time for advertisement, which was brought within the ambit of service tax - 40% of the tax deposited by the appellant to be treated as reasonable and the Tribunal is directed to decide the appeal on merits. - Appeal disposed of : PUNJAB AND HARYANA HIGH COURT
2015-TIOL-2206- HC-P&H-ST
M/s Kay Aar Bee Construction Company Vs CCE
ST - Quantum of pre-deposit to be made by assessee as a condition precedent for hearing of appeal by Tribunal - Assessee submitted that requirement of Rs. 10,00,000/- as a pre-deposit as directed by Commissioner (A) was unfair and excessive - Assessee has already deposited a sum of Rs. 5 lacs - Commissioner (A) is directed to hear the appeal on merits without insisting for pre-deposit of remaining amount: HC - Appeal allowed : PUNJAB AND HARYANA HIGH COURT
2015-TIOL-1993- CESTAT-MUM + Story
General Motors (I) Pvt Ltd Vs CCE
ST - Explanation to rule 6(1) of STR, 1994 inserted by notification 19/2008-ST dt. 10.05.2008 - Associated enterprise - A debit entry will have a corresponding credit entry and the existence of such entry w.r.t royalty on vehicles manufactured by the appellant during a particular month, without an entry in the supplier' s ledger, suffices for it to be included in the value of taxable service and liable to be taxed by the fifth of the following month: CESTAT [para 13] - Appeals partly allowed : MUMBAI CESTAT
2015-TIOL-1992- CESTAT-MUM
Vidharbha Iron And Steel Co Ltd Vs CCE & C
ST - Appellant had, as per arrangement and order of the Bombay High Court, rented out the factory premises to FACOR and were discharging Service Tax liability on Renting of Immovable property - as per the scheme of arrangement, employees of the appellant were to work for FACOR and the salaries and wages along with the government dues were to be reimbursed at actuals to the appellant - Revenue contention is that the amount received by appellant is taxable under the category of 'Manpower Recruitment and Supply Agency service' . Held: Issue is now settled by the Bench in the appellant' s own case - 2015-TIOL-1710- CESTAT-MUM where it is held that the ST demand not sustainable as there is nothing on record to show that the appellant functioned as a commercial concern engaged in supply of manpower to FACOR - Order not sustainable, hence set aside and appeal allowed: CESTAT [para 4, 5] - Appeal allowed : MUMBAI CESTAT
CENTRAL EXCISE SECTION
2015-TIOL-2203- HC-MAD-CX
M/s Fenner India Ltd Vs CESTAT
Central Excise - Valuation - Refund of duty paid claimed on account of turnover discount, monthly consistency incentive and additional discount - Appeal against the order of Tribunal upholding rejection of refunds.
Held: The appellant could not produce either before all the authorities or even before this court, proof to show that the benefit was passed on to the end users, viz., customers . Therefore, the very same issue as against the very same assessee was answered by this court earlier against the very same appellant herein - Since the appellant could not produce the credit notes at any point of time until now, the appeals are dismissed. (para 6) - Appeals dismissed : MADRAS HIGH COURT
2015-TIOL-1991- CESTAT-MUM
M/s Lona Industries Ltd Vs CCE
CX - CENVAT credit of ST paid on CHA services denied on the ground that the services are rendered after clearance of goods from the factory. Held: Issue of eligibility to avail Cenvat Credit of Service Tax paid on C.H.A Services is settled in the favour of the appellant assessee by the judgment of the Tribunal in the case of Adani Pharma. P. Ltd. - 2008-TIOL-2584- CESTAT-AHM and Modern Petrofils - 2010-TIOL-429- CESTAT-AHM - in view of authoritative judicial pronouncements order is incorrect and hence set aside - appeal allowed: CESTAT [para 5, 6] - Appeal allowed : MUMBAI CESTAT
2015-TIOL-1990- CESTAT-MUM
Sahyadri Industries Ltd Vs CCE
CX - Refund - s.11B of CEA, 1944 - Amount for which refund is sought is towards excess payment of duty and the same has been booked by the appellant as expenditure in profit and loss account - this clearly shows that incidence of duty has been passed on to the person to whom the appellant has made sale - however, the appellant submits that they have revised the balance sheet and shown refund amount as receivable under head 'loans and advances' in balance sheet and, therefore, claim is not hit by unjust enrichment - as the revised balance sheet has not been produced before either the original or lower appellate authority, matter requires remand to original authority: CESTAT [para 5, 5.1] - Matter remanded : MUMBAI CESTAT
2015-TIOL-1989- CESTAT-MUM
Santogen Exports Ltd Vs CCE
CX - Appeal filed without depositing 7.5% of CE duty amount confirmed - appellant issued SCN - appellant submitting that their bank account was attached and an amount of Rs.36,57,904/ - was appropriated from the said amount and in view of this position, it is to be construed that the amount of 7.5% has already been deposited - Revenue has informed on verification that the amount of Rs.36.58 lakhs recovered is against the recoverable amount of Rs.151.87 lakhs involved in other four cases and as far as the present appeal is concerned, no amount has been appropriated. Held - in view of the above factual position, since appellant has not deposited the amount of 7.5% as required u/s 35F of CEA, 1944, appeal filed is not maintainable and is, therefore, dismissed: CESTAT [para 3, 4] : MUMBAI CESTAT
2015-TIOL-1988- CESTAT-DEL
M/s Shree Cement Ltd Vs CCE
CX - Cenvat credit denied on the premise that production in assessee' s factory was started on 4.2.2010 and ISD distributed cenvat credit to assessee prior to start of their production and said cenvat credit stand utilized for payment of duty for month of March, 2010 - As per Rule 3 and Rule 7 of CCR, 2004 clarifies that there is no restriction to the effect that if any assessee avail cenvat credit on procurement of inputs, is not entitled to take cenvat credit - Infact, without procuring inputs, or some inputs service, assessee cannot start manufacturing activity - Assessee has correctly taken cenvat credit - When adjudicating authority held that it is an issue of interpretation of Rule, therefore it cannot be alleged that assessee has taken cenvat credit by way of fraud, collusion, willful mis statement, suppression of fact or contravened provisions of Act/ Rule with an intent to evade payment of duty - Extended period of limitation, is also not invokable - Assessee is having case on merits as well as on limitation: CESTAT - Appeal allowed : DELHI CESTAT
2015-TIOL-1987- CESTAT-MAD
Madhuri Steels Vs CCE
Central Excise - Interest - Duty demands confirmed in adjudication and paid; subsequently jurisdictional Range Officer communicated to the appellant that they are required to pay interest under Sec 11AA of the Central Excise Act 1944 on the amount already confirmed and paid by them - RO's communication was upheld by Commissioner (Appeals) as well as the Tribunal whereupon the appellant moved the High Court - The Madurai bench of the HC remanded the cases to the Tribunal, taken up for disposal herein.
Held: The demand was confirmed under Section 11A of the Central Excise Act 1944 - the Superintendent has only quantified the interest as per the Orders-in-Original and requested payment of interest; the letter cannot be construed as demand of interest - the SCN itself raises demand of Central Excise duty under Section 11A along with interest, hence there is no question of any further demand of interest - Bombay High Court in the case of CCE Vs Padmashri V.V.Patil S.S.K. Ltd. clearly held that interest is chargeable once the demand is confirmed under Section 11A and there is no discretion to waive the same - Following the Bombay HC ruling, impugned orders upheld. [Para 5, 6] - Appeals dismissed : CHENNAI CESTAT
CUSTOMS SECTION
2015-TIOL-2205- HC-MAD-CUS + Story
M/s Marine Products Exporters Association Vs UoI
Whether the ban is contrary to the Convention on International Trade in Endangered Species of Wild Fauna and Flora, known in brief as CITES
Held: The Convention on International Trade in Endangered Species of Wild Fauna and Flora by itself does not prohibit the adoption of more stricter standards by any Member country, depending upon the local conditions and the Municipal laws. Apart from the fact that the Convention itself gives a leverage to the Member countries, it is settled law in this country that an International Convention ratified by India is enforceable, only to the extent that it is not in conflict with the Municipal law of the country. In other words, the obligations of the State under an International Convention can be enforced subject only to the provisions of the Municipal law, even if the Municipal law contains lesser standards than those prescribed in the International Convention. If this is so, even with regard to a Municipal law which contains a lesser standard, it is needless to point out that a Municipal law which prescribes a higher standard, will prevail over the prescription contained in the Convention. Hence, the first ground of attack is rejected. (para 13) - Petition dismissed : MADRAS HIGH COURT
2015-TIOL-2204- HC-DEL-CUS
Gurdeep Kaur Vs CC
Customs - Writ Petition against the provisional release order passed by the Assistant Commissioner (Preventive) - Maintainability - As per Section 128 of the Customs Act it is manifestly clear that an appeal lies in respect of any 'decision or order passed under the Customs Act' - The impugned order falls within the description of 'order or decision' with respect to provisional clearance - The impugned order dated 06.04.2015 has been passed by the Assistant Commissioner, Customs Preventive which is lower in rank than a Principal Commissioner of Customs or Commissioner of Customs - No exceptional or extraordinary circumstances have also been brought on record to permit it to invoke its extraordinary jurisdiction under Article 226 of the Constitution of India - Petition is not maintainable. - Petition dismissed : DELHI HIGH COURT
2015-TIOL-1994- CESTAT-DEL + Story
M/s Gaurav Pharma Ltd Vs CCE & ST
Cus - Order of provisional release passed by Commissioner u/s 110A of the Customs Act, 1962 - whether appeal u/s 129A is maintainable before Tribunal - Matter referred to 5-Member Larger Bench: CESTAT [para 6.11] - Reference to Larger Bench : DELHI CESTAT
2015-TIOL-2201- HC-P&H-IT
CIT Vs Indra Sen Aggarwal
Whether it is open to the Tribunal to set aside the order of CIT(A) made u/s 263, by merely passing a non-speaking order and without giving any detailed reasons for the same - NO: HC - Case remanded : PUNJAB AND HARYANA HIGH COURT
2015-TIOL-2200- HC-MUM-IT
CIT Vs Sudhir S Jhunjhunwala
Whether additional evidence filed by the assessee should be allowed, when there was sufficient ground to admit the same - YES: HC
Whether question of failure to produce the necessary evidence before the original authority and the reasons for that failure are all questions of appreciation of facts, therefore in the absence of such findings, no question of law arises - YES: HC - Revenue' s appeal dismissed : BOMBAY HIGH COURT
2015-TIOL-2199- HC-MUM-IT
CIT Vs Shri Vinayak Digamber Kharote
Whether the AO is not empowered to deal with the claim of deduction, which had not found a place either in the return of income or in the revised return of income filed before the Assessing Officer - YES: HC - Revenue' s appeal dismissed : BOMBAY HIGH COURT
2015-TIOL-2198- HC-DEL-IT
CIT Vs Chetan Gupta
Whether reassessment proceeding initiated against the assessee is valid where the notice issued under section 148 was not served to the assessee at the address provided by him - Whether issue of notice to the Assessee and service of such notice upon the Assessee are jurisdictional requirements that must be mandatorily complied with - Whether participation of Assessee or some other person on his behalf not duly authorised in the reassessment proceedings after coming to know of it, will constitute a waiver of the requirement of effecting proper service of notice on the Assessee under Section 148 of the Act - Whether reassessment proceedings finalised by an AO without effecting proper service of notice on the Assessee under Section 148 (1) of the Act are invalid. - Revenue' s appeal dismissed : DELHI HIGH COURT
2015-TIOL-2197- HC-DEL-IT
PCIT Vs Maharaja Appliances Ltd
Whether when the assessee has produced the necessary details before the CIT(A), on the basis of which it has reduced the disallowance proportionate to the expenditure incurred on behalf of its sister concerns, the Tribunal has also confirmed the same, is it still possible to disallow it further on the basis of factual circumstances - NO: HC - Revenue' s appeal dismissed : DELHI HIGH COURT
2015-TIOL-2196- HC-KAR-IT
M/s Embassy Development Corporation Vs ACIT
Whether an assessee can be believed to have availed loan with interest @ 18.5% p.a. to book a flat, in a project for which neither the plan has been sanctioned by the competent authorities nor the construction has been started - NO: HC
Whether advances made to a sister concern in respect of acquisition of a residential project can be treated as business expidiency, in case there is no work in progress or no advance to the material suppliers has been made for the said project by te said sister concern - NO: HC
Whether it is open to the assessee to claim deduction towards interest expenditure incurred for availing loan, which was subsequently advanced to its sister concern in above mentioned circumstances - NO: HC - Assessee' s appeals dismissed : KARNATKA HIGH COURT
2015-TIOL-2195- HC-ALL-IT
M/s District Cooperative Bank Ltd Vs DCIT
Whether it is open to the AO to issue notice u/s 148 merely because the audit report has opined that certain expenses were not allowable u/s 36(1)(viia), when the P&L account was duly scrutinized and only thereafter the net loss was determined by the AO - NO: HC
Whether notice issued u/s 148 initiating reassessment proceeding deserves to be quashed, where the foundational requirement for issuance of such notice was lacking and the condition precedent for initiating a valid reassessment was absent - YES: HC - Assessee' s petition allowed : ALLAHABAD HIGH COURT
2015-TIOL-2194- HC-ALL-IT
Shri Badri Nath Agnihotri Vs ITO
Whether it is not proper for the High Court to interfere with the order of the AO, when the order by the AO under Section 220 (6), is not under challenge, before HC - YES: HC - Assessee' s petition dismissed : ALLAHABAD HIGH COURT
2015-TIOL-1489- ITAT-MUM + Story
Raymond Ltd Vs DCIT
Whether the amount payable by the assessee u/s 140A, over and above the shortfall arising after the credit for payment of TDS and advance tax, can be considered as tax before the processing of return u/s 143(1) - NO: ITAT
Whether the interest to be paid on the excess amount paid with reference to the income tax return filed, is payable only on the tax amount paid in excess and not on self assessment tax, which is paid on self assessment on the basis of finalistion of the return - NO: ITAT - Assessee' s appeal allowed : MUMBAI ITAT
2015-TIOL-1488- ITAT-AHM
M/s Suzlon Energy Ltd Vs ACIT
Whether disallowance of interest expenditure u/s 14A is justified where interest free own funds of the assessee are many times more than its investment and there was nothing on record to suggest any direct nexus between interest bearing borrowed funds and investment in Indian subsidiaries - Whether deduction under section 80-IB is allowable in respect of interest income - Whether only net interest only should be considered for reducing from profits of business for computing deduction u/s.80-IB - Whether disallowance on account of commission payment is justified where the assessee had given evidence that the recipient of the commission provided information in respect of services which helped the sales to mature and realise and all units of assessee was eligible for deduction u/s. 80IB - Whether penalty u/s 271(1)(c) is leviable where in quantum appeal the Tribunal remitted the matter back to Assessing Officer - Whether penalty u/s 271(1)(c) is leviable where assessee has furnished all the details and has neither consciously concealed any income nor has evaded any tax - Whether assessee is liable to deduct tax at source on interest paid by it on Foreign Currency Convertible Bonds to nonresident investor which is specifically excluded from the deeming provisions as per S. 9(1)(v)(b). - Assessee' s appeal partly allowed : AHMEDABAD ITAT
Indirect Tax Basket
SERVICE TAX SECTION
2015-TIOL-2207- HC-P&H-ST
Municipal Corporation Vs CCE & ST
Service Tax - Appeal against the order of Tribunal directing pre-deposit of Service Tax demanded along with interest - The appellant charged licence fee and advertisement tax on the service of sale of space for time for advertisement, which was brought within the ambit of service tax - 40% of the tax deposited by the appellant to be treated as reasonable and the Tribunal is directed to decide the appeal on merits. - Appeal disposed of : PUNJAB AND HARYANA HIGH COURT
2015-TIOL-2206- HC-P&H-ST
M/s Kay Aar Bee Construction Company Vs CCE
ST - Quantum of pre-deposit to be made by assessee as a condition precedent for hearing of appeal by Tribunal - Assessee submitted that requirement of Rs. 10,00,000/- as a pre-deposit as directed by Commissioner (A) was unfair and excessive - Assessee has already deposited a sum of Rs. 5 lacs - Commissioner (A) is directed to hear the appeal on merits without insisting for pre-deposit of remaining amount: HC - Appeal allowed : PUNJAB AND HARYANA HIGH COURT
2015-TIOL-1993- CESTAT-MUM + Story
General Motors (I) Pvt Ltd Vs CCE
ST - Explanation to rule 6(1) of STR, 1994 inserted by notification 19/2008-ST dt. 10.05.2008 - Associated enterprise - A debit entry will have a corresponding credit entry and the existence of such entry w.r.t royalty on vehicles manufactured by the appellant during a particular month, without an entry in the supplier' s ledger, suffices for it to be included in the value of taxable service and liable to be taxed by the fifth of the following month: CESTAT [para 13] - Appeals partly allowed : MUMBAI CESTAT
2015-TIOL-1992- CESTAT-MUM
Vidharbha Iron And Steel Co Ltd Vs CCE & C
ST - Appellant had, as per arrangement and order of the Bombay High Court, rented out the factory premises to FACOR and were discharging Service Tax liability on Renting of Immovable property - as per the scheme of arrangement, employees of the appellant were to work for FACOR and the salaries and wages along with the government dues were to be reimbursed at actuals to the appellant - Revenue contention is that the amount received by appellant is taxable under the category of 'Manpower Recruitment and Supply Agency service' . Held: Issue is now settled by the Bench in the appellant' s own case - 2015-TIOL-1710- CESTAT-MUM where it is held that the ST demand not sustainable as there is nothing on record to show that the appellant functioned as a commercial concern engaged in supply of manpower to FACOR - Order not sustainable, hence set aside and appeal allowed: CESTAT [para 4, 5] - Appeal allowed : MUMBAI CESTAT
CENTRAL EXCISE SECTION
2015-TIOL-2203- HC-MAD-CX
M/s Fenner India Ltd Vs CESTAT
Central Excise - Valuation - Refund of duty paid claimed on account of turnover discount, monthly consistency incentive and additional discount - Appeal against the order of Tribunal upholding rejection of refunds.
Held: The appellant could not produce either before all the authorities or even before this court, proof to show that the benefit was passed on to the end users, viz., customers . Therefore, the very same issue as against the very same assessee was answered by this court earlier against the very same appellant herein - Since the appellant could not produce the credit notes at any point of time until now, the appeals are dismissed. (para 6) - Appeals dismissed : MADRAS HIGH COURT
2015-TIOL-1991- CESTAT-MUM
M/s Lona Industries Ltd Vs CCE
CX - CENVAT credit of ST paid on CHA services denied on the ground that the services are rendered after clearance of goods from the factory. Held: Issue of eligibility to avail Cenvat Credit of Service Tax paid on C.H.A Services is settled in the favour of the appellant assessee by the judgment of the Tribunal in the case of Adani Pharma. P. Ltd. - 2008-TIOL-2584- CESTAT-AHM and Modern Petrofils - 2010-TIOL-429- CESTAT-AHM - in view of authoritative judicial pronouncements order is incorrect and hence set aside - appeal allowed: CESTAT [para 5, 6] - Appeal allowed : MUMBAI CESTAT
2015-TIOL-1990- CESTAT-MUM
Sahyadri Industries Ltd Vs CCE
CX - Refund - s.11B of CEA, 1944 - Amount for which refund is sought is towards excess payment of duty and the same has been booked by the appellant as expenditure in profit and loss account - this clearly shows that incidence of duty has been passed on to the person to whom the appellant has made sale - however, the appellant submits that they have revised the balance sheet and shown refund amount as receivable under head 'loans and advances' in balance sheet and, therefore, claim is not hit by unjust enrichment - as the revised balance sheet has not been produced before either the original or lower appellate authority, matter requires remand to original authority: CESTAT [para 5, 5.1] - Matter remanded : MUMBAI CESTAT
2015-TIOL-1989- CESTAT-MUM
Santogen Exports Ltd Vs CCE
CX - Appeal filed without depositing 7.5% of CE duty amount confirmed - appellant issued SCN - appellant submitting that their bank account was attached and an amount of Rs.36,57,904/ - was appropriated from the said amount and in view of this position, it is to be construed that the amount of 7.5% has already been deposited - Revenue has informed on verification that the amount of Rs.36.58 lakhs recovered is against the recoverable amount of Rs.151.87 lakhs involved in other four cases and as far as the present appeal is concerned, no amount has been appropriated. Held - in view of the above factual position, since appellant has not deposited the amount of 7.5% as required u/s 35F of CEA, 1944, appeal filed is not maintainable and is, therefore, dismissed: CESTAT [para 3, 4] : MUMBAI CESTAT
2015-TIOL-1988- CESTAT-DEL
M/s Shree Cement Ltd Vs CCE
CX - Cenvat credit denied on the premise that production in assessee' s factory was started on 4.2.2010 and ISD distributed cenvat credit to assessee prior to start of their production and said cenvat credit stand utilized for payment of duty for month of March, 2010 - As per Rule 3 and Rule 7 of CCR, 2004 clarifies that there is no restriction to the effect that if any assessee avail cenvat credit on procurement of inputs, is not entitled to take cenvat credit - Infact, without procuring inputs, or some inputs service, assessee cannot start manufacturing activity - Assessee has correctly taken cenvat credit - When adjudicating authority held that it is an issue of interpretation of Rule, therefore it cannot be alleged that assessee has taken cenvat credit by way of fraud, collusion, willful mis statement, suppression of fact or contravened provisions of Act/ Rule with an intent to evade payment of duty - Extended period of limitation, is also not invokable - Assessee is having case on merits as well as on limitation: CESTAT - Appeal allowed : DELHI CESTAT
2015-TIOL-1987- CESTAT-MAD
Madhuri Steels Vs CCE
Central Excise - Interest - Duty demands confirmed in adjudication and paid; subsequently jurisdictional Range Officer communicated to the appellant that they are required to pay interest under Sec 11AA of the Central Excise Act 1944 on the amount already confirmed and paid by them - RO's communication was upheld by Commissioner (Appeals) as well as the Tribunal whereupon the appellant moved the High Court - The Madurai bench of the HC remanded the cases to the Tribunal, taken up for disposal herein.
Held: The demand was confirmed under Section 11A of the Central Excise Act 1944 - the Superintendent has only quantified the interest as per the Orders-in-Original and requested payment of interest; the letter cannot be construed as demand of interest - the SCN itself raises demand of Central Excise duty under Section 11A along with interest, hence there is no question of any further demand of interest - Bombay High Court in the case of CCE Vs Padmashri V.V.Patil S.S.K. Ltd. clearly held that interest is chargeable once the demand is confirmed under Section 11A and there is no discretion to waive the same - Following the Bombay HC ruling, impugned orders upheld. [Para 5, 6] - Appeals dismissed : CHENNAI CESTAT
CUSTOMS SECTION
2015-TIOL-2205- HC-MAD-CUS + Story
M/s Marine Products Exporters Association Vs UoI
Whether the ban is contrary to the Convention on International Trade in Endangered Species of Wild Fauna and Flora, known in brief as CITES
Held: The Convention on International Trade in Endangered Species of Wild Fauna and Flora by itself does not prohibit the adoption of more stricter standards by any Member country, depending upon the local conditions and the Municipal laws. Apart from the fact that the Convention itself gives a leverage to the Member countries, it is settled law in this country that an International Convention ratified by India is enforceable, only to the extent that it is not in conflict with the Municipal law of the country. In other words, the obligations of the State under an International Convention can be enforced subject only to the provisions of the Municipal law, even if the Municipal law contains lesser standards than those prescribed in the International Convention. If this is so, even with regard to a Municipal law which contains a lesser standard, it is needless to point out that a Municipal law which prescribes a higher standard, will prevail over the prescription contained in the Convention. Hence, the first ground of attack is rejected. (para 13) - Petition dismissed : MADRAS HIGH COURT
2015-TIOL-2204- HC-DEL-CUS
Gurdeep Kaur Vs CC
Customs - Writ Petition against the provisional release order passed by the Assistant Commissioner (Preventive) - Maintainability - As per Section 128 of the Customs Act it is manifestly clear that an appeal lies in respect of any 'decision or order passed under the Customs Act' - The impugned order falls within the description of 'order or decision' with respect to provisional clearance - The impugned order dated 06.04.2015 has been passed by the Assistant Commissioner, Customs Preventive which is lower in rank than a Principal Commissioner of Customs or Commissioner of Customs - No exceptional or extraordinary circumstances have also been brought on record to permit it to invoke its extraordinary jurisdiction under Article 226 of the Constitution of India - Petition is not maintainable. - Petition dismissed : DELHI HIGH COURT
2015-TIOL-1994- CESTAT-DEL + Story
M/s Gaurav Pharma Ltd Vs CCE & ST
Cus - Order of provisional release passed by Commissioner u/s 110A of the Customs Act, 1962 - whether appeal u/s 129A is maintainable before Tribunal - Matter referred to 5-Member Larger Bench: CESTAT [para 6.11] - Reference to Larger Bench : DELHI CESTAT
Cus - Order of provisional release passed by Commissioner u/s 110A of Customs Act, 1962 - whether appeal u/s 129A is maintainable before Tribunal - Matter referred to 5-Member Larger Bench
NEW DELHI: AN order was passed by the Commissioner of Customs u/s 110A of the Customs Act, 1962 in the matter of provisional release of seized goods.
The appellants are of the view that the orders impose harsh conditions for releasing the seized goods provisionally and, therefore, they are in appeal before the CESTAT.
Hardships aside, the AR raised a preliminary objection as regards maintainability of the appeal inasmuch as it is the Revenue view that the appeal does not lie before the Tribunal.
It is submitted by the AR that the issue has already been answered by the Larger Bench of the Tribunal in the case of Akanksha Syntex Pvt. Ltd. Vs. CCE Mumbai - 2012-TIOL-1697- CESTAT-MUM wherein it is held that against the order under section 110A of the Customs Act 1962 appeal is not maintainable before the Tribunal;that the ratio laid down has not been reversed by any High Court; that the decision of Larger Bench is binding on the Bench in terms of principles of judicial discipline.
The AR also added - that if the order is a speaking order under Section 110A of the Customs Act 1962, in that situation appeal lies before this Tribunal but if order under section 110A is not speaking order, then appeal does not lie before this Tribunal.
The appellants inter alia submitted that in the judgment of the Hon'ble High Court of Rajasthan in the case of Giriraj Syntex Pvt. Ltd. (WP 4955/2012) the only fact relevant was that the order was passed by the Commissioner under section 110A of the CA, 1962 and the petitioners had approached the High Court by filing writ petitions and when the counsel for the Revenue raised the objection that the petitioner has remedy by filing the appeal in appropriate forum under section 129A of the CA, 1962 and, therefore, the High Court decided the point of law that " the appeal against the order passed by Commissioner under section 110A ibid can be filed under section 129A " ibid and this ratio is binding on the Tribunal.
The CESTAT observed that in the case of Akansha Syntex there was a difference of opinion between the Members and resultantly a reference was made to the third Member and who held that the provisional release order is an interim order of the Adjudicating Authority and that appeal against interim order is not maintainable before the Tribunal.And that is how the Majority decision came about.
The provisions of section 110A of the Customs Act, 1962 were reproduced and it was observed that there is a clear mandate that under section 110A the decision is to be taken by the Adjudicating Authority for imposing conditions for release of seized goods provisionally.
After extracting the provisions of section 129A(1) of the Customs Act, 1962, the Tribunal observed -
++ The provisions of Section 129A of the Act clearly specifies that the appeal is maintainable before this Tribunal against the decision or order passed by the Adjudicating Authority.
++ On analyzing the provisions of Section 110A and Section 129(A) of Customs Act, 1962 we find that any person aggrieved by decision or order passed by the Commissioner of Customs as an adjudicating authority may appeal to this Tribunal. Therefore, under section 110A the order of provisional release is being passed by Commissioner Customs as adjudicating authority and aggrieved from the said order appeal can be filed before this Tribunal under section 129 A(1) of the Act.
++ We also observe that the arguments of Ld. AR is not convincing that if an order passed under section 110A is a speaking order, the appeal lies before this Tribunal and if it is non-speaking order appeal does not lie before this Tribunal as section 129A of the Customs Act speaks that appeal lies before this Tribunal against the order / decisions of the Adjudicating Authority that does not specify that appeal will not lie against non speaking order and appeal shall lie against speaking order. Therefore, the argument advanced by the Ld. AR is mis-leading only.
The Bench also observed - in all the case laws relied upon by the Ld. Counsel, the Hon'ble High Courts have not examined the issue of jurisdiction of this Tribunal to entertain appeal against the order under section 110A of the Customs Act by this Tribunal and only observed that appeals lies before the appropriate forum and under section 129A of the Customs Act.
Taking a view that the Division Bench is not in agreement with the decision taken by the Tribunal in the case of Akanksha Syntex Pvt. Ltd. (supra) and following judicial discipline, in the interest of justice, the matter was referred to the Larger Bench of the Tribunal to decide the following issue:
"Whether an appeal lies before this Tribunal against the order passed by Commissioner (Customs) under section 110A of the Customs Act 1962 for provisional release of the goods or not."
The registry was directed to place the records before the President for consideration and to constitute the Larger Bench to decide the above mentioned issue.
In passing: A recent communication by the Assistant Registrar reveals that the matter is listed before a FIVE MEMBERS Larger Bench and the hearing is fixed on 05/10/2015.
Coincidentally, also see Ravi Foods - 2013-TIOL-2100- CESTAT-MUM where the Division Bench held -
6. The decision of the Akanksha Syntex Pvt. Ltd. (supra) is passed on 17.04.2012. At that time, the decision of Shiv Mahal Textiles Pvt. Ltd. (supra) by the Hon'ble High Court of Rajasthan was not available as the same has been passed on 18.12.2012. The decision of the Hon'ble High Court is binding on us. Therefore, following the decision of Shiv Mahal Textiles Pvt. Ltd. (supra - Civil Writ Petition NO.4946/2012) we hold that the appeal is maintainable before this Tribunal.
NEW DELHI: AN order was passed by the Commissioner of Customs u/s 110A of the Customs Act, 1962 in the matter of provisional release of seized goods.
The appellants are of the view that the orders impose harsh conditions for releasing the seized goods provisionally and, therefore, they are in appeal before the CESTAT.
Hardships aside, the AR raised a preliminary objection as regards maintainability of the appeal inasmuch as it is the Revenue view that the appeal does not lie before the Tribunal.
It is submitted by the AR that the issue has already been answered by the Larger Bench of the Tribunal in the case of Akanksha Syntex Pvt. Ltd. Vs. CCE Mumbai - 2012-TIOL-1697- CESTAT-MUM wherein it is held that against the order under section 110A of the Customs Act 1962 appeal is not maintainable before the Tribunal;that the ratio laid down has not been reversed by any High Court; that the decision of Larger Bench is binding on the Bench in terms of principles of judicial discipline.
The AR also added - that if the order is a speaking order under Section 110A of the Customs Act 1962, in that situation appeal lies before this Tribunal but if order under section 110A is not speaking order, then appeal does not lie before this Tribunal.
The appellants inter alia submitted that in the judgment of the Hon'ble High Court of Rajasthan in the case of Giriraj Syntex Pvt. Ltd. (WP 4955/2012) the only fact relevant was that the order was passed by the Commissioner under section 110A of the CA, 1962 and the petitioners had approached the High Court by filing writ petitions and when the counsel for the Revenue raised the objection that the petitioner has remedy by filing the appeal in appropriate forum under section 129A of the CA, 1962 and, therefore, the High Court decided the point of law that " the appeal against the order passed by Commissioner under section 110A ibid can be filed under section 129A " ibid and this ratio is binding on the Tribunal.
The CESTAT observed that in the case of Akansha Syntex there was a difference of opinion between the Members and resultantly a reference was made to the third Member and who held that the provisional release order is an interim order of the Adjudicating Authority and that appeal against interim order is not maintainable before the Tribunal.And that is how the Majority decision came about.
The provisions of section 110A of the Customs Act, 1962 were reproduced and it was observed that there is a clear mandate that under section 110A the decision is to be taken by the Adjudicating Authority for imposing conditions for release of seized goods provisionally.
After extracting the provisions of section 129A(1) of the Customs Act, 1962, the Tribunal observed -
++ The provisions of Section 129A of the Act clearly specifies that the appeal is maintainable before this Tribunal against the decision or order passed by the Adjudicating Authority.
++ On analyzing the provisions of Section 110A and Section 129(A) of Customs Act, 1962 we find that any person aggrieved by decision or order passed by the Commissioner of Customs as an adjudicating authority may appeal to this Tribunal. Therefore, under section 110A the order of provisional release is being passed by Commissioner Customs as adjudicating authority and aggrieved from the said order appeal can be filed before this Tribunal under section 129 A(1) of the Act.
++ We also observe that the arguments of Ld. AR is not convincing that if an order passed under section 110A is a speaking order, the appeal lies before this Tribunal and if it is non-speaking order appeal does not lie before this Tribunal as section 129A of the Customs Act speaks that appeal lies before this Tribunal against the order / decisions of the Adjudicating Authority that does not specify that appeal will not lie against non speaking order and appeal shall lie against speaking order. Therefore, the argument advanced by the Ld. AR is mis-leading only.
The Bench also observed - in all the case laws relied upon by the Ld. Counsel, the Hon'ble High Courts have not examined the issue of jurisdiction of this Tribunal to entertain appeal against the order under section 110A of the Customs Act by this Tribunal and only observed that appeals lies before the appropriate forum and under section 129A of the Customs Act.
Taking a view that the Division Bench is not in agreement with the decision taken by the Tribunal in the case of Akanksha Syntex Pvt. Ltd. (supra) and following judicial discipline, in the interest of justice, the matter was referred to the Larger Bench of the Tribunal to decide the following issue:
"Whether an appeal lies before this Tribunal against the order passed by Commissioner (Customs) under section 110A of the Customs Act 1962 for provisional release of the goods or not."
The registry was directed to place the records before the President for consideration and to constitute the Larger Bench to decide the above mentioned issue.
In passing: A recent communication by the Assistant Registrar reveals that the matter is listed before a FIVE MEMBERS Larger Bench and the hearing is fixed on 05/10/2015.
Coincidentally, also see Ravi Foods - 2013-TIOL-2100- CESTAT-MUM where the Division Bench held -
6. The decision of the Akanksha Syntex Pvt. Ltd. (supra) is passed on 17.04.2012. At that time, the decision of Shiv Mahal Textiles Pvt. Ltd. (supra) by the Hon'ble High Court of Rajasthan was not available as the same has been passed on 18.12.2012. The decision of the Hon'ble High Court is binding on us. Therefore, following the decision of Shiv Mahal Textiles Pvt. Ltd. (supra - Civil Writ Petition NO.4946/2012) we hold that the appeal is maintainable before this Tribunal.
Ban on export of Shark Fins - Madras High Court dismisses Writ Petition challenging ban imposed vide Notification No.110 (RE-2013)/2009- 2014 dated 6.2.2015 by DGFT
CHENNAI: THE petitioner is an Association of Exporters of Dried Marine Products. The petitioner has come up with a Writ petition challenging a Notification No.110(RE-2013) /2009-2014 dated 06.02.2015, issued by the Director General of Foreign Trade. The Notification has been issued by the Central Government in exercise of the powers conferred by Section 5 of the Foreign Trade (Development and Regulation) Act, 1992 read with para 1.3 of Foreign Trade Policy 2009-2014. By the said Notification, the Central Government has banned the export of Shark fins of all species of Shark. The Petitioner challenged the Notification on the following grounds:
(i) that under the Convention on International Trade in Endangered Species of Wild Fauna and Flora, known in brief as CITES, only 18 species out of 480 species of Shark are protected and hence, a total ban on export is contrary to the Convention;
(ii) that even under Schedule I to the Wild Life Protection Act, only 6 species of Shark and 3 species of Ray are prohibited of being hunted and hence, the Notification issued under the Foreign Trade Policy is contrary to law;
(iii) that the decision to impose a total prohibition was taken in a meeting convened by the Secretary to Government in the Ministry of Commerce and Industry, wherein a proposal was mooted by one member whose credentials are not known and especially when the proposal made by the member was without any basis or factual details justifying the ban; and
(iv) that when the hunting of Shark for domestic consumption is not prohibited, the total prohibition of export of Shark fins, is irrational, arbitrary and unjustified.
In the counter filed, the DGFT has justified the rationale behind the ban imposed.
After hearing the parties, the High Court dismissed the Writ Petition as none of the above four grounds are valid. The High Court held inter alia:
Ground No.1
The Convention on International Trade in Endangered Species of Wild Fauna and Flora by itself does not prohibit the adoption of more stricter standards by any Member country, depending upon the local conditions and the Municipal laws. Apart from the fact that the Convention itself gives a leverage to the Member countries, it is settled law in this country that an International Convention ratified by India is enforceable, only to the extent that it is not in conflict with the Municipal law of the country. In other words, the obligations of the State under an International Convention can be enforced subject only to the provisions of the Municipal law, even if the Municipal law contains lesser standards than those prescribed in the International Convention. If this is so, even with regard to a Municipal law which contains a lesser standard, it is needless to point out that a Municipal law which prescribes a higher standard, will prevail over the prescription contained in the Convention. Hence, the first ground of attack is rejected.
Ground No.2
There is no conflict between the legal framework under the Wild Life (Protection) Act, 1972 and the Foreign Trade (Development and Regulation) Act, 1992. In fact, the legal framework has been developed in such a manner that the Ministry of Environment and Forests works in close coordination with the Ministry of Commerce. What is prohibited under the Wild Life (Protection) Act, 1972, cannot even be hunted and hence, there is no question of any export of such an item. But, what is not prohibited under the Wild Life (Protection) Act, 1972, can be exported, subject only to a total prohibition or a restriction under the Foreign Trade Policy issued in terms of the Foreign Trade (Development and Regulation) Act, 1992. There is no conflict between the two if an item not prohibited under the Wild Life (Protection) Act, 1972, is prohibited of being exported under the other enactment. A conflict will arise only when what is prohibited by the Wild Life (Protection) Act is permitted to be exported under the Foreign Trade (Development and Regulation) Act.
Ground No.3
When the Joint Secretary in the Ministry of Agriculture, belonging to the Department of Animal Husbandry, Dairying and Fisheries had participated in the meeting, it is not known how the non participation of anyone from the Ministry of Environment and Forests would have affected the outcome of the meeting. The ultimate decision taken in the meeting, has not gone against the interests of the Ministry of Environment and Forests. Aquaculture is also an area that comes within the Ministry of Agriculture, especially in the Department of Animal Husbandry, Dairying and Fisheries. Therefore, the non participation of anyone from the Ministry of Environment and Forests, is no ground to hold that the decisions taken at the meeting was vitiated, especially when the decision had not gone against the interests of the Ministry of Environment and Forests.
Ground No.4
The fourth ground of attack to the impugned notification is that when the hunting of Shark for domestic consumption is not prohibited, the total prohibition of export of Shark fins, is irrational, arbitrary and unjustified.
But, there is no merit in this contention. It appears that a very negligible percentage of population captures Shark for domestic consumption. The fact that there is no prohibition for the capture of Sharks for domestic consumption, is no ground to hold the ban on export of Shark fins as arbitrary. If there is no prohibition for export, the total quantity of Shark captured, may increase manifold. Therefore, the distinction that the respondents have made between domestic consumption and export, is actually a reasonable classification, which does not offend Article 14. Hence, the fourth ground of attack should also fail.
CHENNAI: THE petitioner is an Association of Exporters of Dried Marine Products. The petitioner has come up with a Writ petition challenging a Notification No.110(RE-2013) /2009-2014 dated 06.02.2015, issued by the Director General of Foreign Trade. The Notification has been issued by the Central Government in exercise of the powers conferred by Section 5 of the Foreign Trade (Development and Regulation) Act, 1992 read with para 1.3 of Foreign Trade Policy 2009-2014. By the said Notification, the Central Government has banned the export of Shark fins of all species of Shark. The Petitioner challenged the Notification on the following grounds:
(i) that under the Convention on International Trade in Endangered Species of Wild Fauna and Flora, known in brief as CITES, only 18 species out of 480 species of Shark are protected and hence, a total ban on export is contrary to the Convention;
(ii) that even under Schedule I to the Wild Life Protection Act, only 6 species of Shark and 3 species of Ray are prohibited of being hunted and hence, the Notification issued under the Foreign Trade Policy is contrary to law;
(iii) that the decision to impose a total prohibition was taken in a meeting convened by the Secretary to Government in the Ministry of Commerce and Industry, wherein a proposal was mooted by one member whose credentials are not known and especially when the proposal made by the member was without any basis or factual details justifying the ban; and
(iv) that when the hunting of Shark for domestic consumption is not prohibited, the total prohibition of export of Shark fins, is irrational, arbitrary and unjustified.
In the counter filed, the DGFT has justified the rationale behind the ban imposed.
After hearing the parties, the High Court dismissed the Writ Petition as none of the above four grounds are valid. The High Court held inter alia:
Ground No.1
The Convention on International Trade in Endangered Species of Wild Fauna and Flora by itself does not prohibit the adoption of more stricter standards by any Member country, depending upon the local conditions and the Municipal laws. Apart from the fact that the Convention itself gives a leverage to the Member countries, it is settled law in this country that an International Convention ratified by India is enforceable, only to the extent that it is not in conflict with the Municipal law of the country. In other words, the obligations of the State under an International Convention can be enforced subject only to the provisions of the Municipal law, even if the Municipal law contains lesser standards than those prescribed in the International Convention. If this is so, even with regard to a Municipal law which contains a lesser standard, it is needless to point out that a Municipal law which prescribes a higher standard, will prevail over the prescription contained in the Convention. Hence, the first ground of attack is rejected.
Ground No.2
There is no conflict between the legal framework under the Wild Life (Protection) Act, 1972 and the Foreign Trade (Development and Regulation) Act, 1992. In fact, the legal framework has been developed in such a manner that the Ministry of Environment and Forests works in close coordination with the Ministry of Commerce. What is prohibited under the Wild Life (Protection) Act, 1972, cannot even be hunted and hence, there is no question of any export of such an item. But, what is not prohibited under the Wild Life (Protection) Act, 1972, can be exported, subject only to a total prohibition or a restriction under the Foreign Trade Policy issued in terms of the Foreign Trade (Development and Regulation) Act, 1992. There is no conflict between the two if an item not prohibited under the Wild Life (Protection) Act, 1972, is prohibited of being exported under the other enactment. A conflict will arise only when what is prohibited by the Wild Life (Protection) Act is permitted to be exported under the Foreign Trade (Development and Regulation) Act.
Ground No.3
When the Joint Secretary in the Ministry of Agriculture, belonging to the Department of Animal Husbandry, Dairying and Fisheries had participated in the meeting, it is not known how the non participation of anyone from the Ministry of Environment and Forests would have affected the outcome of the meeting. The ultimate decision taken in the meeting, has not gone against the interests of the Ministry of Environment and Forests. Aquaculture is also an area that comes within the Ministry of Agriculture, especially in the Department of Animal Husbandry, Dairying and Fisheries. Therefore, the non participation of anyone from the Ministry of Environment and Forests, is no ground to hold that the decisions taken at the meeting was vitiated, especially when the decision had not gone against the interests of the Ministry of Environment and Forests.
Ground No.4
The fourth ground of attack to the impugned notification is that when the hunting of Shark for domestic consumption is not prohibited, the total prohibition of export of Shark fins, is irrational, arbitrary and unjustified.
But, there is no merit in this contention. It appears that a very negligible percentage of population captures Shark for domestic consumption. The fact that there is no prohibition for the capture of Sharks for domestic consumption, is no ground to hold the ban on export of Shark fins as arbitrary. If there is no prohibition for export, the total quantity of Shark captured, may increase manifold. Therefore, the distinction that the respondents have made between domestic consumption and export, is actually a reasonable classification, which does not offend Article 14. Hence, the fourth ground of attack should also fail.
DEPUTY COMMISSIONER OF INCOME TAX vs.STRYKER INDIA PVT. LTD.
DELHI TRIBUNAL
Reassessment—Income escaping assessment—Assessee had filed its original return declaring Nil income—Assessment u/s 143(3) was completed accepting the returned income—Thereafter notice u/s 147 was issued after recording reasons—In the final assessment order passed by the AO u/s 143(3) read with s 147, total income was determined at Rs.2.31 crore by making an addition on account of provisions for and obsolescence in stock amounting to Rs.134.47 lac and not accepting the claim of the assessee of set off of the current year's income amounting to Rs.96.62 lac against the brought forward business loss and depreciation—CIT(A) quashed the assessment by holding that it was a case of mere change of opinion—Hence revenue's appeal—Held, action of the AO in erroneously allowing the benefit of non-existent brought forward business loss against the current year's income could have been corrected even by the CIT treating the assessment order erroneous and prejudicial to the interest of the Revenue to this extent—This mistake could have been corrected by the AO himself u/s 154 within the specified time limit—Ordinarily, rectification proceedings to correct such mistake were preferable, but the AO cannot be rendered remedyless in bringing to tax the escaped income, if the action is taken u/s 147—CIT(A) was not justified in quashing the assessment by branding it as a change of opinion—Once the re-assessment order was held to be valid on this count, the matter required adjudication by the CIT(A) on the merits of all the additions which were made by the AO—Since CIT(A), after setting aside the assessment order passed u/s 143(3) read with s 147, did not deal with the merits of the additions, Tribunal vacated his findings of quashing the re-assessment order and restored the matter to his file for disposal of appeal on merits—Revenue's appeal allowed
JUDE MEDICAL INDIA PRIVATE LIMITED vs. DEPUTY COMMISSIONER OF INCOME TAX
HYDERABAD TRIBUNAL
Transfer Pricing—Reference to transfer pricing officer—Assessee company which was engaged in the business of trading of medical devices had filed its return of income declaring a loss of Rs.6,80,33,234—During the assessment proceedings u/s 143(3) , the AO observed that the assessee had entered into international transactions with its AE for purchase of Cardio Vascular Devices for sale of the same in India to non-related parties mainly through distributors and also through direct sales to hospitals—AO referred the matter to the TPO for determination of the ALP u/s 92CA—TPO proceeded to determine the ALP by adopting the TNNM as the most appropriate method and suggested the shortfall of Rs.11,55,73, 046 as an adjustment u/s 92CA—AO passed a draft assessment order against which assessee preferred objections before the DRP raising an objection that the RPM was the most appropriate method in the circumstances of the case of the assessee—DRP, however, upheld the findings of the TPO incorporated in the draft assessment order—AO passed final assessment order against assessee—Held, assessee was purchasing medical devices from its AEs even in the earlier A.Ys too—From the order of this Tribunal is was evident that the assessee had entered into international transactions for purchase of medical equipments and there was no dispute with regard to the method adopted by the assessee during its TP study—There was no reason as to why the assessee should not be allowed to adopt the same method even during the relevant A.Y—it was found that the TPO has not brought on record any evidence as to how the products sold by the comparable companies are not similar to the products sold by the assessee herein—When the TPO desires to reject the method consistently being followed by the assessee and desires to adopt a different method, the TPO was required to give his reasoning which was absent in the present case before us—Issue was remand the issue to the file of the TPO for determination of the most appropriate method for determination of the ALP—Assesses appeal was allowed.
HYDERABAD TRIBUNAL
Transfer Pricing—Reference to transfer pricing officer—Assessee company which was engaged in the business of trading of medical devices had filed its return of income declaring a loss of Rs.6,80,33,234—During the assessment proceedings u/s 143(3) , the AO observed that the assessee had entered into international transactions with its AE for purchase of Cardio Vascular Devices for sale of the same in India to non-related parties mainly through distributors and also through direct sales to hospitals—AO referred the matter to the TPO for determination of the ALP u/s 92CA—TPO proceeded to determine the ALP by adopting the TNNM as the most appropriate method and suggested the shortfall of Rs.11,55,73, 046 as an adjustment u/s 92CA—AO passed a draft assessment order against which assessee preferred objections before the DRP raising an objection that the RPM was the most appropriate method in the circumstances of the case of the assessee—DRP, however, upheld the findings of the TPO incorporated in the draft assessment order—AO passed final assessment order against assessee—Held, assessee was purchasing medical devices from its AEs even in the earlier A.Ys too—From the order of this Tribunal is was evident that the assessee had entered into international transactions for purchase of medical equipments and there was no dispute with regard to the method adopted by the assessee during its TP study—There was no reason as to why the assessee should not be allowed to adopt the same method even during the relevant A.Y—it was found that the TPO has not brought on record any evidence as to how the products sold by the comparable companies are not similar to the products sold by the assessee herein—When the TPO desires to reject the method consistently being followed by the assessee and desires to adopt a different method, the TPO was required to give his reasoning which was absent in the present case before us—Issue was remand the issue to the file of the TPO for determination of the most appropriate method for determination of the ALP—Assesses appeal was allowed.
[2015] 61 taxmann.com 67 (Madras)
HIGH COURT OF MADRAS
S. Mukanchand Bothra
v.
P. Mani
__._,_.___
No comments:
Post a Comment